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Quarterly ReportFebruary 2019

For the Period Ended 28 February 2019

Areca Progressive Income Fund 2.0

QUA RTERLY REPORT FEBRUA RY 2019

ARECA PROGRESSIVE INCOME FUND 2.0

Contents

CORPORATE DIRECTORY 2

MANAGER’S REPORT

Fund Information, Performance & Review 3 Market Review & Outlook 7

TRUSTEE’S REPORT 8

STATEMENT BY THE MANAGER 8

UNAUDITED FINANCIAL STATEMENTS FOR

Areca Progressive Income 2.0 Fund

9

QUARTERLY REPORT FEBRUARY 2019


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

Wong Teck Meng (Executive)

Edward Iskandar Toh Bin Abdullah (Executive)

Raja Datuk Zaharaton Bt Raja Dato’ Zainal Abidin

(Independent)

Dr. Junid Saham (Independent)

INVESTMENT COMMITTEE MEMBERS

Dato’ Seri Lee Kah Choon (Independent) Raja Datuk Zaharaton Bt Raja Dato’ Zainal Abidin

(Independent)

Dr. Junid Saham (Independent)

TRUSTEE

RHB Trustees Berhad (573019-U)

Level 11, Tower 1, RHB Centre

Jalan Tun Razak

50400 Kuala Lumpur

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

AUDITOR

Deloitte PLT (LLP0010145-LCA)

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 BRANCH IPOH BRANCH MALACCA BRANCH

368-2-02 Belissa Row 11A, (First Floor) 95A, Jalan Melaka Raya 24

Jalan Burma, Georgetown Persiaran Greentown 5 Taman Melaka Raya

10350 Pulau Pinang Greentown Business Centre 75000 Melaka

Tel : 604-210 2011 30450 Ipoh, Perak Tel : 606-282 9111

Fax: 604-210 2013 Tel : 605-249 6697 Fax: 606-283 9112

Fax: 605-249 6696

KUCHING BRANCH

1st Floor, Sublot 3

Lot7998, Block 16

KCLD, Cha Yi Goldland

Jalan Tun Jugah/ Stutong

93350 Kuching, Sarawak

Tel: 6082-572 472



3

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

Name of the Fund Areca Progressive Income Fund 2.0

Fund Category/

Type

Wholesale Fund with flexible asset allocation / Income & Growth

Objective of the

Fund

The Fund aims to provide a combination of income and capital growth.

Performance

Benchmark

Maybank’s 12-month fixed deposit rate

Distribution

Policy of the

Fund

Subject to availability of distributable income, the Fund will distribute income

at least once a year.

Profile of

unitholdings

* excluding units held

by the Manager

(please refer to Notes

to Financial Statement

–Note 4)

As at 28 February 2019

Size of Holding

(Units)

No. of

accounts %

No. of

unit held

(million)

%

Up to 5,000 - - - -

5,001 to 10,000 - - - -

10,001 to 50,000 12 19.67 0.60 1.34

50,001 to 500,000 36 59.02 7.18 16.06

500,001 and above 13 21.31 36.94 82.60

Total* 61 100.00 44.72 100.00

Rebates & Soft

Commissions

The Manager retains soft commissions received from stockbrokers, provided

that 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 August 2018

Initial Offer Price RM1.0000 per unit during the initial offer period of 30 days from launch date.

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

Value per unit

Financial Year

End

31 August



4

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

01.12.2018

to

28.02.2019

23.08.2018

to

30.11.2018

Total Net Asset Value (“NAV”)

Total Net Asset Value (RM million) 45.8* 45.8

Units in circulation (million units) 45* 45

NAV per unit (RM) 1.0185* 1.0178

* Ex-Distribution

HIGHEST & LOWEST NAV per unit Please refer to Note 1 for further information on NAV and pricing policy

Highest NAV per unit (RM) 1.0205 1.0178

Lowest NAV per unit (RM) 1.0027 1.0000

ASSET ALLOCATION % of NAV

Fixed Income Securities

Unlisted preferences shares 98.18 98.25

Cash & cash equivalents including

placements & repo 1.82 1.75

DISTRIBUTION

Please refer to Note 2 for further information

Distribution date 14 Dec 2018 -

Gross distribution (sen per unit) 1.80 -

Net distribution (sen per unit) 1.80 -

NAV before distribution (RM per unit) 1.0205 (13 Dec) -

NAV after distribution (RM per unit) 1.0207 (15 Dec) -

UNIT SPLITS

There was no unit split exercise for the financial period under review.

EXPENSE/ TURNOVER

Management expense ratio (MER) (%) 0.49 0.53

Please refer to Note 3 for further information

Portfolio turnover ratio (PTR) (times) 0.0001 0.56 Please refer to Note 4 for further information

TOTAL RETURN Please refer to Note 5 for further information

Total Return (%) 1.87 1.78

- Capital Return (%) 0.07 1.78

- Income Return (%) 1.80 -

Annual Total Return (%) 7.78* 7.33*

Benchmark: Average Maybank’s

12-month fixed deposit rate (%) 3.39* 3.41*

*Annualised for comparison purpose only



5

Total Return since launch (%) 3.68 1.78

1-yr 3-yrs 5-yrs

Average Total Return per annum (%) - - -

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: Net distribution of 1.80 sen per unit was declared on 14 December 2018 and in the absence of any

instructions, was automatically reinvested into another unit trust fund at the NAV per unit of the distribution

day without any entry fee.

Note 3: 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 4: 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 5: Fund performance figures are calculated based on NAV to NAV and assume reinvestment of

distributions (if any) at NAV. The total return and the performance benchmark 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.



6

F U N D R E V I E W

The NAV per unit of the Fund was RM1.0185 as at 28 February 2019. For the quarter ending 28

February 2019, Fund posted an annualised return of 7.78% against the benchmark Maybank’s 12

mths FD of 3.39%. This highly concentrated and focused fund outperformed the benchmark as

domestic interest rates conditions remain low, stable and accommodative while our investment

continue to perform.

The fund has achieved its objective of providing its investors a combination of income and capital

growth for the period under review.

Investment Policy and Strategy

The credit quality of the sole issue in the portfolio remains strong and has sufficient security

coverage. The assigned properties as security have a gross sales value of at least 1.5x the amount raised. In addition, the Fund is also supported by the corporate (LBS Bina Group Bhd) and personal

guarantees of the principal shareholder. We are confident of the going concern of the issuer and

their ability to fulfill all its financial obligation to the fund. We continue to monitor their credit quality

regularly and rigorously.

NAV per unit as at 28 February 2019 RM1.0185

Asset Allocation / Portfolio Composition

28.02.2019

Unlisted fixed income securities

98.18%

Cash & cash equivalents

1.82%

Performance of Areca Progressive Income Fund 2.0 for the financial period since inception to 28 February 2019

98.18%

1.82%

Areca Progressive Income

Maybank 12 Months Fixed Deposit Rate


MANAGER’S REPORT

7

MARKET REVIEW & OUTLOOK

ECONOMIC REVIEW & OUTLOOK

This 3 months ending February 2019 was witness to a choppy Dow Jones, downgrade of global growth,

the longest US Government shutdown in history and an about turn in Federal Reserves’ outlook on interest rates. 4th quarter grew by 3% y-o-y matching previous quarter’s rate but on a quarter to

quarter basis, it underwhelmed at 2.2% below market expectation of 2.4%. Unemployment remains

healthy at 3.8% in February while participation rate stood at 63.2%. However, non-farm payrolls

surprisingly stalled in February at 33,000 jobs, way below 2018’s average of 223,000. In addition,

inflation has trended down in this 3 months with 1.9%, 1.6% and 1.5% from December through

February but 12 months moving average core inflation continue to creep up to 2.19%.

The first FOMC meeting this year passed with no change in interest rates. Supported by less than

sparkling jobs and inflation data as well as being subject to Trump’s Twitter pressure, Federal Reserve

chairman Jerome Powell has now turned dovish and urged patience (at least 4 times in his speech)

amidst uncertain global outlook, a contrast from last year’s bullish stance. The case for rate hikes have weakened while dot plots point to no more hikes this year.

Citing progress in US-China trade talks, Trump delayed increasing tariffs at the end of February. Tariffs

were due to be raised from 10% to 25% on March 1st. Apart from broad headlines as to enforcing

intellectual properties rights and increased purchase of agricultural products, details of “tremendous

progress” is scant. Interesting to note that trade deficit for 2018 was higher by 11.6% when compared

to the previous year.

Meantime, the European Union remains distracted by Brexit. Interest rates policy has been kept

unchanged while they continue to wind down their bond buying program. They remain confident that

the supportive monetary policy will be necessary to sustain the momentum until the middle of 2019.

Malaysia’s economy expanded 4.7% for the 4th quarter 2018 bringing the whole year growth to 4.7%

vs 5.9% in previous year. Inflation was muted with December reading at 0.2% concluding the year at

1%. However, the first two months of the year saw deflationary pressures recording -0.7% and -0.4%

on the CPI. Foreign Reserves rose slightly to USD102.4 billion (or RM423.3 billion) at the end of

February ‘19 against end November ’18 record of USD102.0 billion (or RM422.8 bil).

FIXED INCOME MARKET REVIEW & OUTLOOK

In contrast against last quarter, US Treasuries struggled to gain traction on the upside and allowed

doubt to global growth to influence benchmark yields. Breaking into this period, 10-year US Treasuries

opened at 3.04%. Sliding south throughout, it hit a low of 2.55% at the start of 2019 before closing at

2.72%. This when compared to the bullish economic environment in previous period when it hit last

year’s high of 3.23%. Worryingly, the 2-10 year spread narrowed to just 11 bps in December, narrowest

since June 2007. Yields inversions which have preceded all except one US recession in the last 50 years

is feared to occur.

There was one Overnight Policy rate meeting in Malaysia this period with the OPR left unchanged at

3.25%. Bank Negara Malaysia noted the increased downside risk to momentum of global growth partly attributed to ongoing unresolved US-China trade rift, consequently weaker external demand. Added to

this, deflation or low inflation has now given market participants to develop an expectation of a potential

rate cut this year.

This 3 months in review also saw a turnaround in foreign investments in our domestic sovereign debts.

With a net inflow of RM0.77 bil compared to previous 3 months RM1.35 bil outflow, foreign investors

hold RM173.54 bil of our domestic sovereign debt or 22.9%. However, it dropped to the lowest level in

more than 8 years at the end of January where foreigners held only 22.5% of total outstanding issues.



8

T R U S T E E ’ S R E P O R T

For The Financial Period Ended 28 February 2019

To the Unitholders of Areca Progressive Income Fund 2.0

We have acted as Trustee for Areca Progressive Income Fund 2.0 (“the Fund”) for the financial period ended 28 February 2019. 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 Manager and the Trustee under the Deed,

the Securities Commission Malaysia’s Guidelines on Unlisted Capital Market Products under the

Lodge and Launch Framework, the Capital Markets and Services Act 2007 and other applicable

laws;

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

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

regulatory requirements; and

(d) the distribution of RM0.018 (net) per unit to the unitholders during the financial period ended 28

February 2019 is consistent with the objectives of the Fund.

For and on behalf of

RHB TRUSTEES BERHAD

(Company No: 573019-U)

MOHD SOFIAN BIN KAMARUDDIN LEE YIT CHENG

VICE PRESIDENT HEAD, GROUP INT’L OPS SUPPORT &

TRUSTEE OPS

Kuala Lumpur, Malaysia

26 April 2019

STATEMENT BY THE MANAGER

To the Unitholders of Areca Progressive Income Fund 2.0

We, WONG TECK MENG and EDWARD ISKANDAR TOH BIN ABDULLAH, two of the Directors of the

Manager, Areca Capital Sdn Bhd, do hereby state that in the opinion of the Manager, the 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

Unlisted Capital Market Products under the Lodge and Launch Framework in Malaysia so as to give a

true and fair view of the financial position of the Fund as of 28 February 2019 and the financial

performance and the cash flows of the Fund for the financial period ended on that date.

For and on behalf of the Manager

Areca Capital Sdn Bhd

WONG TECK MENG

EDWARD ISKANDAR TOH BIN ABDULLAH

CEO/ EXECUTIVE DIRECTOR

Kuala Lumpur

26 April 2019

CIO/ EXECUTIVE DIRECTOR



9

UNAUDITED STATEMENT OF FINANCIAL POSITION

As at 28 February 2019

Note 28.02.2019 30.11.2018

Assets RM RM

Investments

Unlisted fixed income securities 3 45,000,000 45,000,000

Other Assets

Interest receivable 1,465 86

Premium receivable 983,835 995,548 Short-term deposits 976,741 948,126

Cash at bank 9,363 349

Total Other Assets 1,971,404 1,944,109

Total Assets 46,971,404 46,944,109

Unitholders’ Fund and Liabilities

Liabilities

Advanced premium 1,068,750 1,068,750 Accrued management fee 70,120 75,063

Total liabilities 1,138,870 1,143,813

Unitholders’ Fund

Unitholders’ capital 45,000,000 45,000,000

Retained earnings 832,534 800,296

Net Asset Value Attributable to

Unitholders

45,832,534

45,800,296

Total Unitholders’ Fund and Liabilities 46,971,404 46,944,109

Number of Units in Circulation

45,000,000

45,000,000

Net Asset Value Per Unit (Ex-

Distribution) 9 1.0185 1.0178

The accompanying Notes form an integral part of the Financial Statements



10

UNAUDITED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME


1.12.2018

to

28.02.2019

23.8.2018

to

30.11.2018

Note RM RM

Investment Income

Interest income 9,876 16,268 Premium/gains from realisation of preference

shares 1,057,037 995,548

1,066,913 1,011,816

Expenses

Management fee 5 224,540 211,480

Other expenses 135 40

224,675 211,520

Net Income Before Taxation 842,238 800,296

Income Tax Expense 8 - -

Net Income After Tax/Total Comprehensive

Income For The Financial Period

842,238

800,296

Net Income After Tax Is Made Up Of:

Realised gain 842,238 800,296




11

UNAUDITED STATEMENT OF CHANGES IN NET ASSET VALUE


Unit holders’

capital

Retained

earnings

Total net

asset value

RM RM RM

As at 23 August 2018 (date of launch) - - -

Amount received from units created 45,000,000 - 45,000,000

Total comprehensive income for the

financial period - 800,296 800,296

As at 30 November 2018 45,000,000 800,296 45,800,296

As at 1 December 2018 45,000,000 800,296 45,800,296

Total comprehensive income for the financial

period - 842,238 842,238

Distribution to unitholders for the financial period(Note 10) - (810,000) (810,000)

As at 28 February 2019 45,000,000 832,534 45,832,534




12

UNAUDITED STATEMENT OF CASH FLOWS For The Financial Period Ended 28 February 2019

1.12.2018

to

28.02.2019

23.8.2018

to

30.11.2018

RM RM

Cash Flows From/(Used In) Operating

Activities

Purchase of investments - (45,000,000)

Interest received 8,497 16,183

Premium received 1,068,750 -

Management fee paid (229,483) (136,417)

Payment for other expenses (135) (40)

Net Cash Generated From/(Used In) Operating

Activities

847,629

(45,120,274)

Cash Flows (Used In)/From Financing

Activities

Cash proceeds from units created - 46,068,749

Distribution to unitholders (810,000) -

Net Cash (Used In)/Generated From Financing

Activities (810,000) 46,068,749

Net Increase In Cash And Cash Equivalents 37,629 948,475

Cash And Cash Equivalents At Beginning Of

Financial Period 948,475 -

Cash And Cash Equivalents At End Of Financial Period

986,104 948,475

Cash and cash equivalents consist of the following amounts:

Short-term deposits 976,741 948,126 Cash at bank 9,363 349

986,104 948,475




13

NOTES TO THE FINANCIAL STATEMENTS

1 GENERAL INFORMATION

Areca Progressive Income Fund 2.0 (“the Fund”) was established pursuant to the Trust Deed dated

20 August 2018 (“the Deed”) between Areca Capital Sdn Bhd as the Manager, RHB Trustees Berhad

as the Trustee and all the registered unit holders of the Fund.

The principal activity of the Fund is to invest in investments as defined under Schedule 7 of the

Deed, which include securities listed on Bursa Malaysia Securities Berhad or any other permitted

foreign stock exchanges, unlisted securities, debentures, collective investment schemes, preference

shares, fixed income related structured products, derivatives, deposits with financial institutions

and other forms of investments as may be agreed upon by the Manager and the Trustee from time

to time. The Fund commenced operations on 23 August 2018 and will continue its operations until

terminated by the Trustee in accordance with Part 11 of the Deed.

The objective of the Fund is to provide investors a combination of income and capital growth. Any

material changes to the Fund’s objective would require unit holder’s approval.

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 THE FINANCIAL STATEMENTS

The financial statements of the Fund have been prepared in accordance with Malaysian Financial

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

Securities Commission Malaysia’s Guidelines on Unlisted Capital Market Products under the Lodge

and Launch Framework in Malaysia.

3 INVESTMENT

28.02.201

8 30.11.2018

At aggregate cost RM RM Unlisted fixed income securities 45,000,000 45,000,000

28.02.201

8 30.11.2018

At fair value RM RM Unlisted fixed income securities 45,000,000 45,000,000

Details of unlisted fixed income securities are as follows:

Issuer (rating)

maturity/ coupon (%)

Quantity

Units

Market

Price

Aggregate

Cost

Carrying

Value

Fair

Value

Fair Value as a % of

Net Asset

Value

RM RM RM RM RM %

28.02.2019

Preferences Shares Utuh Sejagat Sdn Bhd

(NR)2019/9.5 45,000,000 1.00 45,000,000 45,000,000 45,000,000 98.18

30.11.2018

Preferences Shares Utuh Sejagat Sdn Bhd

(NR)2019/9.5 45,000,000 1.00 45,000,000 45,000,000 45,000,000 98.25



14

4 UNITS HELD BY THE MANAGER

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

follows:

28.02.2019

The Manager 272,700 277,745

30.11.2018

The Manager 272,700 277,554

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.

5 MANAGEMENT FEE

The Schedule 8 of the Deed provides that the Manager is entitled to an annual management fee

at a rate not exceeding 2.00% 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 is subject to 6% goods and services tax (“GST”) effective 1 April 2015 until 31

May 2018. The Management fee is not subject to any taxes from 1 June 2018 until 28 February

2019.

6 TRUSTEE’S FEE BORNE BY THE MANAGER

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

not exceeding 0.07% 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 is

subject to 6% goods and services tax (“GST”) effective 1 April 2015 until 31 May 2018. The

Trustee’s fee is not subject to any taxes from 1 June 2018 until 28 February 2019.

There is no Trustee’s fee provided for in the financial statements for the financial period as the fee

was borne by the Manager.

7 EXPENSES BORNE BY THE MANAGER

There are no audit fee and tax agent’s fee provided for in the financial statements for the financial

period as the fees were borne by the Manager.

8 INCOME TAX EXPENSE

There is no income tax expense for the period as interest income derived by the Fund is exempted

income from tax pursuant to Paragraph 35 and 35A of 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.

9 NET ASSET VALUE PER UNIT

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

as of 28 February 2019 of RM45,832,534 by units in issue as of 28 February 2019 of 45,000,000

units. (30.11.2018:RM45,800,296 by 45,000,000 units).



15

10 NET DISTRIBUTION

28.02.2019

RM

30.11.2018

RM

Distribution to unitholders is from the following sources:

Interest income 9,876 -

Premium/gains from realisation of preference shares 1,024,799 -

1,034,675 -

Less: Expenses (224,675) -

Net distribution 810,000 -

The distribution above has been made as follows:

Distribution on 14 December 2018

Gross distribution per unit (sen) 1.80 -

Net distribution per unit (sen) 1.80 -

11 MANAGEMENT EXPENSE RATIO AND PORTFOLIO TURNOVER

Management Expense Ratio (MER)

Management expense ratio for the Fund is 0.49% for the financial period ended 28 February 2019.

(30.11.2018:0.53%). The management expense ratio which includes management fee, Trustee’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 financial period is RM45,529,312.78. (30.11.2018:

RM40,109,377.98).

Portfolio Turnover Ratio (PTR)

The portfolio turnover ratio for the Fund is 0.0001 times for the financial period ended 28 February

2019. (30.11.2018:0.56 times). The portfolio turnover ratio is derived from the following

calculation:

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

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

Where: total acquisition for the financial period = NIL (30.11.2018: RM45,000,000.00)

total disposal for the financial period = 10,688 (30.11.2018: NIL)



16

12 TRADE WITH BROKERS/DEALERS

Details of transactions with brokers/dealers are as follows:

28.02.2019

Brokers/Dealers

Value of

Trades

% of

Total

Trades

RM %

Hong Leong Investment Bank Berhad 1,132,000 36.86

KAF Investment Bank Berhad 1,939,221 63.14

3,071,221 100.00

30.11.2018

Brokers/Dealers

Value of

Trades

% of

Total

Trades

RM %

Hong Leong Investment Bank Berhad 32,510,000 96.81

KAF Investment Bank Berhad 1,070,000 3.19

33,580,000 100.00

13 RISK MANAGEMENT POLICIES

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Fund seeks to preserve capital as well as to provide investors with medium to long term capital

growth by investing in securities that have potential for capital growth. 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 credit risk, liquidity risk, market risk (including price risk) and

capital risk.

Categories of Financial Instruments

28.02.2019

RM

30.11.2018

RM Financial assets Loans and receivables:

Unlisted fixed income securities 45,000,000 45,000,000

Interest receivables 1,465 86

Premium receivable 983,835 995,548

Short term deposits 976,741 948,126

Cash at bank 9,363 349

Other Financial Liability

Advanced premium 1,068,750 1,068,750

Accrued management fee 70,120 75,063



17

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 of 28 February 2019.

The credit risk for cash at bank is considered negligible, since the counterparties are reputable

banks with high quality external ratings.

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. The Fund manages its liquidity risk by maintaining a sufficient

level of liquid assets to meet anticipated payments and cancellations by unit holders. The liquid

assets comprise cash at bank and short-term deposits 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

28.02.2019 RM RM RM RM

Financial liability:

Non-interest bearing

Advanced premium - 1,068,750 - 1,068,750

Accrued management fee 70,120 - - 70,120

30.11.2018

Financial Liability

Non-interest bearing

Advanced premium

Accrued management fee

-

75,063

1,068,750

-

-

-

1,068,750

75,063

Market risk management

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

or fund. It is usually due to changes in market variables such as interest rates and markets prices.

This risk cannot be removed from an investment portfolio, which is solely invested within that

particular market, by diversification.

During the current financial period, as the Fund invests only in Malaysian unlisted securities, the

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

Malaysia.



18

Price risk management

Price risk is the risk of unfavourable changes in the value of unlisted securities as the result of

changes in the levels of the equity indices. The price risk exposure arises from the Fund’s

investment in unlisted securities. The Manager manages the risk of unfavourable changes in prices

by continuous monitoring of the performance and risk profile of the investment portfolio.

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.

14 QUARTERLY ACCOUNTS

The quarterly accounts for the period ended 28 February 2019 have not been audited.

Kuching Branch1st Floor, Sublot 3, Lot 7998, Block16 KCLD, Cha Yi Goldland, Jalan Tun Jugah / Stutong93350 Kuching, SarawakT 082 572 472

Pulau Pinang Branch368-2-02 Belisa Row, Jalan Burma Georgetown, 10350 Pulau PinangT 604 210 2011 F 604 210 2013· ·

Ipoh Branch11A, (First Floor), Persiaran Greentown 5Greentown Business Centre, 30450 Ipoh, PerakT 605 249 6697 F 605 249 6696·

Melaka Branch95-A, Jalan Melaka Raya 24Taman Melaka Raya, 75000 MelakaT 606 282 9111 F 606 283 9112·

·

·

·

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