kenanga balanced fund · 2021. 5. 31. · tel: 03-7495 8000 fax: 03-2095 5332 membership:...

KENANGA BALANCED FUND

ANNUAL REPORT

For the Financial Year Ended 28 February 2021

Contents Pages

Corporate Directory ii

Directory of Manager’s Offices iii

Fund information 1

Manager’s Report 2 - 9

Fund Performance 10 - 12

Trustee’s Report 13

independent Auditors’ Report 14 - 16

Statement by the Manager 17

Financial Statements 18 - 50

KENANGA BALANCED FUND

ii kenanga Balanced Fund Annual Report

CORPORATE DiRECTORY

Manager: Kenanga investors Berhad Company No. 199501024358 (353563-P)

Registered OfficeLevel 17, kenanga Tower,237, Jalan Tun Razak,50400 kuala Lumpur, Malaysia.Tel: 03-2172 2888Fax: 03-2172 2999

Business OfficeLevel 14, kenanga Tower,237, Jalan Tun Razak,50400 kuala Lumpur, Malaysia.Tel: 03-2172 3000Fax: 03-2172 3080E-mail: [email protected] Website: www.kenangaInvestors.com.my

Board of DirectorsDatuk Syed Ahmad Alwee Alsree (Chairman)Syed Zafilen Syed Alwee (independent

Director)Imran Devindran Abdullah (independent

Director)Norazian Ahmad Tajuddin (independent

Director)Ismitz Matthew De Alwis (Executive

Director)

investment CommitteeSyed Zafilen Syed Alwee (independent

Member)Imran Devindran Abdullah (independent

Member)Norazian Ahmad Tajuddin (independent

Member)Ismitz Matthew De Alwis (Non-independent

Member)

Company Secretary: Norliza Abd Samad (MAICSA 7011089)

Level 17, kenanga Tower, 237, Jalan Tun Razak, 50400 kuala Lumpur, Malaysia

Trustee: Maybank Trustees Berhad Company No. 196301000109 (5004-P)

Registered and Business Address8th Floor, Menara Maybank, 100, Jalan Tun Perak, 50050 kuala Lumpur.Tel: 03-2074 8580 / 8952 Email: [email protected]

Auditor: Ernst & Young PLT Company No. 202006000003 (LLP0022760-LCA) & AF 0039

Level 23A, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, 50490 kuala Lumpur.Tel: 03-7495 8000 Fax: 03-2095 5332

Tax Adviser: Ernst & Young Tax Consultants Sdn Bhd Company No. 198901002487 (179793-k)

Level 23A, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, 50490 kuala Lumpur.Tel: 03-7495 8000 Fax: 03-2095 5332

Membership: Federation of investment Managers Malaysia (FiMM)

19-06-1, 6th Floor, Wisma Tune, 19, Lorong Dungun, Damansara Heights, 50490 kuala Lumpur, Malaysia.Tel: 03-2093 2600 Fax: 03-2093 2700 Website: www.fimm.com.my

kenanga Balanced Fund Annual Report iii

Regional Branch Offices:

Kuala LumpurLevel 13, kenanga Tower237, Jalan Tun Razak50400 kuala Lumpur, MalaysiaTel : 03-2172 3123Fax : 03-2172 3133 MelakaNo. 43, Jalan kSB 11Taman kota Syahbandar75200 MelakaTel : 06-240 2310Fax : 06-240 2287

KlangNo. 12, Jalan Batai Laut 3, Taman Intan41300 klangSelangor Darul EhsanTel : 03-3341 8818 / 03-3348 7889Fax : 03-3341 8816

Penang5.04, 5th Floor, Menara Boustead Penang No. 39, Jalan Sultan Ahmad Shah10050 PenangTel : 04-210 6628Fax : 04-210 6644 Miri2nd Floor, Lot 1264Centre Point Commercial CentreJalan Melayu98000 Miri, SarawakTel : 085-416 866Fax : 085-322 340

Seremban2nd Floor, No. 1D-2, Jalan Tuanku Munawir70000 Seremban, Negeri SembilanTel : 06-761 5678Fax : 06-761 2242

Johor BahruNo. 63Jalan Molek 3/1,Taman Molek81100 Johor Bahru, JohorTel : 07-288 1683Fax : 07-288 1693 Kuching1st Floor, No 71Lot 10900, Jalan Tun Jugah93350 kuching, SarawakTel : 082-572 228Fax : 082-572 229

KuantanGround Floor ShopNo. B8, Jalan Tun Ismail 125000 kuantan, PahangTel : 09-514 3688Fax : 09-514 3838

ipohSuite 1, 2nd FloorNo. 63, Persiaran Greenhill30450 Ipoh, PerakTel : 05-254 7573 / 7570 / 7575Fax : 05-254 7606 Kota KinabaluLevel 8, Wisma Great EasternNo. 68, Jalan Gaya88000 kota kinabalu, Sabah Tel : 088-203 063Fax : 088-203 062

Petaling Jaya44B, Jalan SS21/35Damansara Utama47400 Petaling Jaya, SelangorTel : 03-7710 8828Fax : 03-7710 8830

DiRECTORY OF MANAGER’S OFFiCES

1 kenanga Balanced Fund Annual Report

1.1 Fund Name

kenanga Balanced Fund (KBF or the Fund)

1.2 Fund Category / Type

Balanced / Growth & Income

1.3 investment Objective

The Fund aims to provide a portfolio of investments with lower risk and lower volatility for investors.

1.4 investment Strategy

The Fund seeks to maximise total returns by providing investors with a combination of capital appreciation and income distribution, if any, while reducing risk through diversified investments in equities and fixed income securities.

1.5 Duration

The Fund was launched on 23 May 2001 and shall exist as long as it appears to the Manager and the Trustee that it is in the interests of the unit holders for it to continue.

1.6 Performance Benchmark

60% FTSE-Bursa Malaysia 100 Index and 40% Maybank 12-month Fixed Deposit Rate.

1.7 Distribution Policy

The Fund aims to pay a regular distribution annually, where possible.

1.8 Breakdown of unit holdings of the Fund as at 28 February 2021

Size of holdings No. of unit holders

No. of units held

5,000 and below 1,929 2,464,9445,001 – 10,000 232 1,707,06610,001 – 50,000 329 7,661,38150,001 – 500,000 137 15,247,237500,001 and above 19 104,646,196Total 2,646 131,726,824

1. FUND iNFORMATiON

kenanga Balanced Fund Annual Report 2

2.1 Explanation on whether the Fund has achieved its investment objective

Since inception date, the Fund has appreciated by 341.34% in net asset value terms, outperforming its benchmark increase of 169.48%. In terms of risk and volatility, as at 28 February 2021, the Fund achieved a 3-year annualised standard deviation of 12.97 and is also classified as moderate volatility under the Lipper Fund Volatility Classification. The Fund’s performance has therefore satisfied the objective of the Fund.

2.2 Comparison between the Fund’s performance and performance of the benchmark

Performance Chart Since Launch (23/5/2001 - 28/2/2021)Kenanga Balanced Fund vs Benchmark*

% Cumulative Return, Launch to 28/02/2021

Kenanga Balanced : 341.34 60% FTSE Bursa Malaysia 100 Index and 40% Maybank 12-month Fixed Deposit Rate : 169.48

-50

0

50

200

250

100150

300

350

400

May

01

Dec

01

Jun

02D

ec 0

2Ju

n 03

Dec

03

Jun

04D

ec 0

4Ju

n 05

Dec

05

Jun

06D

ec 0

6Ju

n 07

Dec

07

Jun

08D

ec 0

8Ju

n 09

Dec

09

Jun

10D

ec 1

0Ju

n 11

Dec

11

Jun

12D

ec 1

2Ju

n 13

Dec

13

Jun

14D

ec 1

4Ju

n 15

Dec

15

Jun

16D

ec 1

6Ju

n 17

Dec

17

Jun

18D

ec 1

8Ju

n 19

Dec

19

Jun

20

Feb

21

Source: Novagni Analytics and Advisory* 60% FTSE Bursa Malaysia 100 Index and 40% Maybank 2-month Fixed Deposit Rate

2.3 investment strategies and policies employed during the financial year under review

During the financial year under review, the Fund invested mainly in a balanced portfolio of equity and fixed income securities. On the equity front, the Fund raised its equity exposure upon the sharp pullback in March 2020, focusing on sectors that have strong earnings growth such as rubber gloves and technology. Given ample liquidity in the retail market, the Fund selectively increased its holdings in quality small capitalisation stocks as well. Subsequently, post the strong rebound, the Fund took some profit in 4Q20. Meanwhile, on the fixed income front, the Fund was mainly invested in corporate bonds of issuers with acceptable credit profiles.

2. MANAGER’S REPORT


2.4 The Fund’s asset allocation as at 28 February 2021 and comparison with the previous financial year

Asset 28 Feb 2021 29 Feb 2020Listed investment securities 54.7% 56.8%Unlisted bonds 28.1% 34.1%Short term deposits and cash 17.2% 9.1%

Reason for the differences in asset allocation

The Fund’s equity exposure has decreased as of 28 February 2021 as the fund manager took profit on outperformers post the strong rebound in domestic equity market from its March and October 2020 lows. Similarly, the fund manager also took profit on some of its bonds which had recorded significant gains. Towards the end of the financial year under review, the fund manager reduced its allocation in unlisted bonds given the fluctuations in domestic bond markets.

2.5 Fund performance analysis based on NAV per unit (adjusted for income distribution; if any) since last review year

Year under reviewkBF 25.54%FTSE Bursa Malaysia 100/Maybank 12 mths FD Rate (60:40) 7.43%

Source: Lipper

For the financial year under review, the Fund outperformed its benchmark by 18.11 percentage points. The outperformance was mainly due to good sector allocation and stock selection from the equity front. In addition, the outperformance also came from the fixed income exposure as bonds in the portfolio rallied strongly as a result of significant monetary easing by the central bank during the financial year under review.

2.6 Review of the market

Equity market review

After a panic sell-off in 1Q20, equity markets improved into 3Q20 following aggressive easing by global central banks and massive fiscal stimulus unleashed by governments. Moderation of new infection cases for Covid-19 also added to the positive sentiment. In addition, after more than a month’s stalemate between Saudi and Russia over production issues, OPEC+ group finally agreed to reduce oil output. Locally, Bank Negara released its economy outlook and projected 2020 GDP growth at a range of -2.0% to +0.5%.

Subsequently, in August the Fed announced a shift to average inflation targeting, wherein interest rate could stay lower for longer period. The Brent and WTI oil futures posted fourth monthly gains of 4.6% and 5.8% respectively on better demand expectation and OPEC+’s supply discipline.


2.6 Review of the market (contd.)

Equity market review (contd.)

Global markets turned risk-on mode in November as investors welcomed the prospect of a Biden presidency with a split congress and the positive news of Pfizer and BioNTech’s Covid-19 vaccine result. Locally, BNM kept OPR rate unchanged at 1.75% and projected 2020/21 GDP growth at -3.5% to -5.5%/5.5% to 8% respectively. The government tabled an expansionary budget 2021 on 6 November with 2020/21 budget deficit projection of 6%/5.4% respectively. The budget was later passed on 25 November with some tweaks including automatic loan moratorium for B40 and SMEs and expansion of EPF account 1 withdrawal scheme. The FBMkLCI jumped 6.5% to 1,563 points in November 2020.

Equity markets remained steady in December as US approved the use of Pfizer and BioNTech vaccine. US Congress finally passed US$900 billion Covid relief bill to restore unemployment benefits and other assistance to businesses. Investors continued to switch from defensives into recovery sectors on the expectation of stronger economy growth following the start of vaccination process. Meanwhile, the Uk announced a new variant of the Covid-19 virus which is more contagious but does not lead to worsening symptoms. On the domestic scene, Fitch Rating downgraded Malaysia’s rating from A- to BBB+, but raised the outlook to stable from negative. Fitch cited the downgrade due to weakened key credit metrics and political uncertainties which may cause policy uncertainties and hamper governance standards improvement.

MSCI Asia ex-Japan gained 6.6% in December, closing at an all-time high outperforming both MSCI ASEAN (+3.7%) and Dow Jones (+3.3%). The leading markets in the region are korea (+10.9%), India (+8.2%), and Taiwan (+7.4%), while Thailand (+2.9%), Shanghai (+2.4%), while Singapore (+1.4%) lagged behind despite posting MoM gains. Commodities had a particularly good month as well with both crude oil and CPO up by 8.8% and 8.9% respectively over the month, amid the vaccine breakthrough and U.S. stimulus package boosting the demand outlook.

Locally, FBM kLCI posted a second consecutive month of gains as investors continued to position into the Covid-19 recovery play in the market following news of Covid-19 vaccine breakthroughs in November. All sectors, except healthcare and REITs, posted MoM positive returns in December. The four sectors that posted the highest returns were finance, energy, property and construction, as investors rotated into sectors that are expected to benefit from the projected rebound in the economy. The FBM kLCI closed +4.1% MoM in December at 1,627 pts. The December gain helped the FBM kLCI to end 2020 with a positive YoY return of 2.4%.

Into January 2021, markets’ risk-on rally continued into the month bolstered by vaccination rollouts, optimism on the new Biden administration’s proposed stimulus plans as well as China’s stronger than expected recovery. However, sentiment turned towards the end of the month on vaccine delays, new virus mutations and the economic impact from extended lockdowns. Global markets sold off due to rising US bond yields, fear of sharper inflation and an earlier than expected timeline in normalizing monetary policy.

Locally, the FBMkLCI ended February marginally higher (+0.72%) as Malaysia began easing lockdown measures and started to roll out vaccination program. FBM100 gained 1.7% while small caps (FBM SC) jumped 7.89%. All sectors (except healthcare) were broadly higher led by energy as oil prices trended higher and broke USD60 pbl level. Retailers remained as net buyers at RM2.0 billion (versus RM1.8 billion in January) whilst local institutions were net sellers at RM1.7 billion. Foreign institutions remained net sellers at RM0.9 billion.



Fixed income market review

In March 2020, US Treasuries (UST) experienced significant fluctuations as the global risk sentiment was dampened by plunging crude oil prices and the growing Covid-19 pandemic. During the month, the US Federal Reserve (Fed) cut interest rates twice – by 50 basis points (bps) on 3 March and another 100bps on 15 March, to counter heightened risks to the US economic outlook. Consequently, demand for UST surged as investors fled to safe-haven assets. Given the gloomy growth outlook for the US as well as globally, the UST yield curve steepened as yields fell to record lows with 2Y and 10Y UST yields down by 66bps and 48bps to 0.25% and 0.67% respectively as at end-March.

Locally, the Malaysian bond market also experienced fluctuations as the global risk-off sentiment spread into regional markets. In early March, domestic bonds rallied strongly after Bank Negara Malaysia (BNM) cut interest rates for the second time during the year. On 3 March 2020, as widely expected, BNM lowered the Overnight Policy Rate (OPR) by 25bps to 2.50%, to support the domestic economy which was expected to be impacted by the Covid-19 outbreak. However, Malaysian Government Securities (MGS) yields subsequently climbed higher as the global risk-off sentiment intensified, before the higher yields began to attract buying interest towards month-end. Month-on-month (m-o-m), the MGS yield curve also steepened as the 3Y and 10Y yields rose by 13bps and 56bps to 2.73% and 3.37% respectively as at end-March.

Moving into 2Q20, UST traded relatively range-bound on expectations that interest rates would remain low for a prolonged period of time. During its policy meetings held in April and June, Fed kept interest rates unchanged at 0.00%-0.25%, and signalled that interest rates would remain near zero through 2022 until policymakers are confident that the US’ recovery is firmly on track. Given expectations that US interest rates would remain low over the near to medium term, 10Y UST yields ended the quarter largely unchanged at 0.66% as at end-June.

In contrast, the MGS market rallied strongly in April, in anticipation of a further rate cut by BNM. As widely expected on 5 May, BNM further lowered the OPR by 50bps to a decade low of 2.00%. BNM also announced that banking institutions are allowed to fully use MGS and Government Investment Issues (GII) to meet the Statutory Reserve requirement (SRR) of 2.00%, thus releasing another RM16 billion worth of liquidity into the banking system. However, MGS yields trended higher in early June following the announcement of the RM35 billion National Economic Recovery Plan (PENJANA), which was expected to raise Malaysia’s fiscal deficit to around 5.8%-6.0% in 2020 (2019: 3.2%). Nonetheless, the higher yields quickly attracted strong buying interest, driving 10Y MGS yields lower to 2.86% at end-June. Quarter-on-quarter (q-o-q), MGS yields tumbled by between 50-60bps, driven by sustained buying interest from both local and foreign investors.

UST kicked-off 2H20 on a strong note, with yields easing across the board as the rise in Covid-19 cases globally clouded the outlook for growth, drawing safe haven bids. In July, the continuous rise in Covid-19 cases in the US led several states to reverse their reopening plans, thus intensifying concerns over the near-term US economic outlook. Sentiment was also dampened by the sharp contraction in US Gross Domestic Product (GDP) of 32.9% q-o-q in 2Q20, reflecting the effects of lockdown measures on US economic activity. However, UST yields began to climb in August due to better-than-expected US manufacturing and employment data, as well as higher incoming supply of UST to finance stimulus measures. As a result, the 10Y UST yields closed 4bps higher, from 0.66% end-June to 0.70% end-August.



Fixed income market review (contd.)

Meanwhile, MGS continued to rally strongly across the board after BNM lowered the OPR in July. As widely expected on 7 July, BNM cut the OPR for the fourth time in 2020 by 25bps, to a new historic low of 1.75%. The central bank highlighted that the reduction in the OPR is intended to accelerate the pace of economic recovery, given continued downside risks to growth emanating from both domestic and external factors. In response, 10Y MGS yields tumbled by 31bps m-o-m to 2.55% end-July and touched a new historical low of 2.40% on 5 August amid sustained buying interest from both local and foreign investors. However, buying interest was dampened by news that the Federal Government would be raising its debt ceiling from the current 55% of GDP to 60% to fund existing and future stimulus packages. 10Y MGS yields subsequently rose to 2.60% as the yield curve steepened amid profit-taking activities towards end-August.

On 10 September BNM kept the OPR unchanged at 1.75%, signalling that the earlier rate cut totalling 125bps would be sufficient to stimulate to the domestic economy. Following the decision, investors adjusted their near-term rate cut expectations, pushing shorter-tenured MGS yields slightly higher. MGS yields continued to trend higher, with 10Y yields climbing to 2.72% on 24 September ahead of FTSE Russell’s announcement. As expected, Malaysia was retained on the World Government Bond Index (WGBI) until the next review in March 2021. FTSE Russell continued to acknowledge BNM’s initiatives to enhance foreign exchange and bond market liquidity, and continues to engage with stakeholders to assess the market improvements. As the decision was within market expectations, 10Y MGS subsequently rallied to 2.68% at end-September on portfolio rebalancing flows.

UST yields trended higher in October as optimism grew over another fiscal stimulus plan aimed at countering the impact of Covid-19 on the US economy. Nonetheless, the continued rise in Covid-19 cases (both in the US and globally) as well as uncertainties ahead of the upcoming US Presidential elections continued to support demand for safe haven assets. In November, sentiment subsequently improved as clarity emerged on the outcome of the US elections, thus easing demand for UST and driving yields higher. Investor optimism was further boosted by positive vaccine developments, although this was tempered by the record number of Covid-19 cases. Towards the end of the year, investors switched to risk-on mode, following the rollout of Covid-19 vaccines globally as well as the passage of a USD900 billion pandemic aid and spending package. Sentiment was further boosted by the recovery in US GDP, which expanded by 33.4% q-o-q in 3Q20, due to the reopening of businesses and resumption of economic activities. Consequently, 10Y UST yields ended the year higher at 0.92%.

Locally, Malaysia’s better-than-expected 3Q20 GDP reading of -2.7% y-o-y (expected: -4.0%; 2Q20: -17.1%), tempered investors’ expectations for an interest rate cut in early 2021, however demand for MGS stayed resilient as daily local Covid-19 infections remained high. On 4 December, Fitch Ratings lowered Malaysia’s sovereign credit rating from “A-/negative“ to “BBB+/stable” (which remains at investment grade), citing the weakening of Malaysia’s key credit metrics due to the depth and duration of the pandemic. Toward year-end, trading activities began to slow down as investors took a break for the year-end holidays. 10Y MGS yields fell by 68bps y-o-y, from 3.30% at end-2019 to close the year at 2.62%.



Fixed income market review (contd.)

In January, UST yields surged as investors turned optimistic over the additional stimulus package that would spur US growth and inflation. Risk appetite was further boosted by the continued rollout of Covid-19 vaccinations as well as upbeat US manufacturing data, reflecting the continued recovery from the sharp declines recorded earlier in 2020. The improving outlook for growth and inflation spurred global risk-on sentiment, pushing UST yields higher in February. Investors were also cautious over the potentially heavier incoming supply of government bonds to finance US President Biden’s proposed USD1.9tn fiscal stimulus package. As a result, 10Y UST yields rose by 49bps from 0.91% at end-December to 1.40% at end-February.

Locally, demand for MGS was dampened by the higher UST yields, alongside domestic developments including the return of the Movement Control Order (MCO) and declaration of a state of emergency to manage the surge in domestic Covid-19 cases. On 28 January, Moody’s Investors Service affirmed Malaysia’s sovereign credit rating at A3 with a stable outlook, on expectations that the country’s medium-term growth prospects will remain strong. Although the full year GDP for 2020 contracted by 5.6% (compared to earlier forecasts of between -3.5% to -5.5%), risk sentiment remained buoyed by expectations of a pick-up in growth prospects for 2021, thus dampening rate cut expectations and easing demand for MGS. Consequently, 10Y MGS yields climbed by 48bps to 3.10% at end-February 2021.

Equity market outlook

For the equity market, while short-term risks of worsening infections and extended lockdowns may persist, investors should look past the noise in lieu of the upcoming vaccine deliveries which should support the eventual recovery. Hence, cyclical sectors and recovery stocks are likely to outperform. Global policy also remains supportive of the recovery, with ample fiscal stimulus, low interest rates and high levels of monetary injections by global central banks.

Fixed income market outlook

While the ongoing health crisis is beginning to improve and vaccine rollouts have raised expectations of a return to somewhat normal conditions later this year, the Fed acknowledged that the US economic recovery remains uneven and far from complete. Although the Fed’s massive interest rate cuts in 2020 and monthly purchases of USD120 billion in government bonds are providing substantial support to the US economy, interest rates are still expected to remain low for a prolonged period of time to support the recovery.

Locally, on 4 March, BNM kept the OPR unchanged at 1.75% at its second monetary policy meeting for the year. The central bank acknowledged that the reintroduction of the movement control order (MCO 2.0) will affect growth in 1Q21, however the impact is expected to be less severe than that experienced in the 2Q20. Growth is projected to improve from 2Q21 onwards, driven by the recovery in global demand, continued policy support and the rollout of the domestic Covid-19 vaccine programme. Nonetheless, downside risks remain, as the pace of recovery will depend on the effectiveness of vaccine rollouts, both globally and domestically. Meanwhile, headline inflation remained negative at -0.2% y-o-y in January (December: -1.4%). For 2021, headline inflation is projected to average higher, with a temporary spike in 2Q21 due to the low base effect, before moderating thereafter. Underlying inflation is expected to remain subdued amid continued spare capacity in the economy.



Fixed income market outlook (contd.)

Given the moderate inflation outlook and lingering uncertainties ahead, BNM is widely anticipated to maintain its accommodative monetary policy stance, with the central bank assuring that it would utilize its policy levers as appropriate to enable a sustainable economic recovery.

Strategy

We continue to adopt a barbell strategy in our sector positioning and maintain overweight in the technology sector to ride on secular growth trends. On the other hand, we also favour more cyclical sectors such as consumer discretionary, financials, energy, and commodities to take advantage of the recovery.

On fixed income, we continue our investment strategy of investing in liquid, highly sought after bonds, to enable swift reaction to any changes in market sentiment or outlook. Our focus will continue to be on strong credits, stable long-term cashflows, solid financial metrics and good corporate governance. Given lingering macroeconomic uncertainties, we overweight on sectors that are resilient to economic cycles. Furthermore, we overweight on higher-rated bonds for their enhanced yield relative to lower yielding government bonds, and as the lack of supply within this segment continues to support its bond prices. Nevertheless, given lingering macroeconomic uncertainties, we will stay vigilant and continuously monitor developments on both the local and global front. We will tread with caution and remain flexible in managing portfolio duration to enable a quick response to changes in market environment, while enhancing portfolio yields and managing risk exposure.

2.7 Distributions

For the financial year under review, the Fund did not declare any income distribution.

2.8 Details of any unit split exercise

The Fund did not carry out any unit split exercise during the financial year under review.

2.9 Significant changes in the state of affairs of the Fund during the financial year

There were no significant changes in the state of affairs of the Fund during the financial year and up until the date of the manager’s report, not otherwise disclosed in the financial statements.

However, a Second Supplemental Master Prospectus was issued on 18 December 2020. Please refer to the Second Supplemental Master Prospectus for further details.

2.10 Circumstances that materially affect any interests of the unit holders

There were no circumstances that materially affected any interests of the unit holders during the financial year under review.


2.11 Rebates and soft commissions

It is the policy of the Manager to credit any rebates received into the account of the Fund. Any soft commissions received by investment manager on behalf of the Fund are in the form of research and advisory services that assist in the decision making process relating to the investment of the Fund which are of demonstrable benefit to unit holders of the Fund. Any dealing with the broker or dealer is executed on terms which are the most favourable for the Fund. During the financial year under review, the Manager received soft commissions from its stockbrokers.

2.12 Cross-trade

During the financial year under review, cross-trade transactions were undertaken by the Manager for the best interest of the Fund in accordance to the relevant internal and regulatory requirements. Cross trades can only be undertaken upon the verification by Compliance based on the following conditions:

(a) permitted by authorised personnel;(b) the sale and purchase decisions are in the best interest of clients, unit holders and

the fund as a whole;(c) reason(s) for such transactions is documented prior to execution of the trades;(d) transactions are executed through a dealer or a financial institution on an arm’s

length and fair value basis; and(e) cross trade transactions are disclosed to both clients accordingly.


3.1 Details of portfolio composition of the Fund for the last three financial years as at 28/29 February are as follows:

a. Distribution among industry sectors and category of investments:

FY FY FY 2021 2020 2019 % % %

Technology 19.8 9.7 4.7 Industrial Products and Services 14.9 7.8 11.7 Health Care 6.2 5.1 4.6 Construction 3.6 4.9 5.8 Financial Services 3.4 4.1 3.0 Energy 2.6 8.1 4.2 Consumer Products and Services 2.4 3.4 14.5 Utilities 1.8 3.4 - Property - 4.5 5.1 Plantation - 1.4 - Transportation and Logistics - 1.2 0.3 Telecommunications and Media - 0.9 - Real Estate Investment Trusts - 2.3 2.4 Warrants - - 0.2 Unlisted corporate bonds 28.1 30.8 31.6 Unlisted government guaranteed bonds - 3.3 3.4 Short term deposits and cash 17.2 9.1 8.5

100.0 100.0 100.0

Note: The above mentioned percentages are based on total investment market value plus cash.

b. Distribution among markets

The Fund invested in local listed investment secutities, unlisted bonds and cash instruments only.

3. FUND PERFORMANCE


3.2 Performance details of the Fund for the last three financial years ended 28/29 February are as follows:

FY2021

FY2020

FY2019

Net asset value (“NAV”) (RM Million) Units in circulation (Million) NAV per unit (RM) Highest NAV per unit (RM) Lowest NAV per unit (RM) Total return (%) - Capital growth (%) - Income growth (%) Gross distribution per unit (sen)Net distribution per unit (sen) Management expense ratio (“MER”) (%)1

Portfolio turnover ratio (“PTR”) (times)2

71.56 131.73 0.5432 0.5582 0.3510

25.5425.54

- - -

1.64 0.66

38.09 88.02

0.4327 0.4471 0.4070

6.316.31

- - -

1.69 0.82

35.76 87.86

0.4070 0.4456 0.3869

-8.85-8.85

- - -

1.70 0.92

Note: Total return is the actual return of the Fund for the respective financial years, computed based on NAV per unit and net of all fees.

MER is computed based on the total fees and expenses incurred by the Fund divided by the average fund size calculated on a daily basis. PTR is computed based on the average of the total acquisitions and total disposals of investment securities of the Fund divided by the average fund size calculated on a daily basis.

1 MER is lower against previous financial year mainly due to increase in average fund size during the financial year under review.

2 PTR is lower due to the increase in average fund size during the financial year under review.


3.3 Average total return of the Fund

1 Year29 Feb 20 -28 Feb 21

3 Years28 Feb 18 -28 Feb 21

5 Years29 Feb 16 - 28 Feb 21

kBF 25.54% 7.37% 8.72%

Benchmark* 7.43% -2.12% 1.24% Source: Lipper * FTSE-Bursa Malaysia 100/Maybank 12 months FD Rate (60:40)

3.4 Annual total return of the Fund

Year under review

29 Feb 20 - 28 Feb 21

1 Year

28 Feb 19 -29 Feb 20

28 Feb 18 -28 Feb 19

28 Feb 17 -28 Feb 18

29 Feb 16 -28 Feb 17

kBF 25.54% 6.31% -8.85% 12.92% 9.45%

Benchmark* 7.43% -7.94% -6.39% 7.84% 3.70% Source: Lipper * FTSE-Bursa Malaysia 100/Maybank 12 months FD Rate (60:40)

investors are reminded that past performance is not necessarily indicative of future performance. Unit prices and investment returns may fluctuate.


4. TRUSTEE’S REPORT TO THE UNiT HOLDERS OF KENANGA BALANCED FUND

We, CIMB Commerce Trustee Berhad being the trustee of kenanga Balanced Fund (“the Fund”), are of the opinion that kenanga Investors Berhad (“the Manager”), acting in the capacity as Manager of the Fund, has fulfilled its duties in the following manner for the financial year ended 28 February 2021.

a) The Fund has been managed in accordance with the limitations imposed on the investment powers of the Manager under the Deed, the Securities Commission Malaysia’s Guidelines on Unit Trust Funds, the Capital Markets and Services Act 2007 (as amended from time to time) and other applicable laws;

b) Valuation and pricing for the Fund has been carried out in accordance with the Deed and relevant regulatory requirements; and

c) Creation and cancellation of units have been carried out in accordance with the Deed and relevant regulatory requirements.

For and on behalf of CIMB Commerce Trustee Berhad

Lee kooi YokeChief Executive Officer

kuala Lumpur, Malaysia

31 May 2021


5. iNDEPENDENT AUDiTORS’ REPORT TO THE UNiT HOLDERS OF KENANGA BALANCED FUND

Report on the audit of the financial statements

Opinion

We have audited the financial statements of Kenanga Balanced Fund (“the Fund”), which comprise the statement of financial position as at 28 February 2021, and the statement of comprehensive income, statement of changes in net asset value and statement of cash flows of the Fund for the financial year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information, as set out on pages 18 to 50.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Fund as at 28 February 2021 and of its financial performance and cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards.

Basis for opinion

We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence and other ethical responsibilities

We are independent of the Fund in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Code of Ethics for Professional Accountants (including International Independence Standards) (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.

Information other than the financial statements and auditors’ report thereon

The Manager of the Fund (“the Manager”) is responsible for the other information. The other information comprises the information included in the annual report of the Fund, but does not include the financial statements of the Fund and our auditors’ report thereon.

Our opinion on the financial statements of the Fund does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements of the Fund, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Fund or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.


5. iNDEPENDENT AUDiTORS’ REPORT TO THE UNiT HOLDERS OF KENANGA BALANCED FUND (CONTD.)

Responsibilities of the Manager and the Trustee for the financial statements

The Manager is responsible for the preparation of financial statements of the Fund that give a true and fair view in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards. The Manager is also responsible for such internal control as the Manager determines is necessary to enable the preparation of financial statements of the Fund that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements of the Fund, the Manager is responsible for assessing the Fund’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Manager either intends to liquidate the Fund or to cease operations, or has no realistic alternative but to do so.

The Trustee is responsible for overseeing the Fund’s financial reporting process. The Trustee is also responsible for ensuring that the Manager maintains proper accounting and other records as are necessary to enable true and fair presentation of these financial statements.

Auditors’ responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements of the Fund as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements of the Fund, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Manager.


5. iNDEPENDENT AUDiTORS’ REPORT TO THE UNiT HOLDERS OF KENANGA BALANCED FUND (CONTD.)

Auditors’ responsibilities for the audit of the financial statements (contd.)

• Conclude on the appropriateness of the Manager’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Fund’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements of the Fund or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Fund to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements of the Fund, including the disclosures, and whether the financial statements of the Fund represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with the Manager regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Other matters

This report is made solely to the unit holders of the Fund, as a body, in accordance with the Guidelines on Unit Trust Funds issued by the Securities Commission Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

Ernst & Young PLT Ng Sue Ean202006000003 (LLP0022760-LCA) & AF 0039 No. 03276/07/2022 JChartered Accountants Chartered Accountant


31 May 2021


6. STATEMENT BY THE MANAGER

I, Ismitz Matthew De Alwis, being a director of kenanga Investors Berhad, do hereby state that, in the opinion of the Manager, the accompanying statement of financial position as at 28 February 2021 and the related statement of comprehensive income, statement of changes in net asset value and statement of cash flows for the financial year ended 28 February 2021 together with notes thereto, are drawn up in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards so as to give a true and fair view of the financial position of Kenanga Balanced Fund as at 28 February 2021 and of its financial performance and cash flows for the financial year then ended and comply with the requirements of the Deed.

For and on behalf of the Manager kENANGA INVESTORS BERHAD

ISMITZ MATTHEW DE ALWISExecutive Director/Chief Executive Officer


31 May 2021


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

7. FiNANCiAL STATEMENTS

7.1 STATEMENT OF COMPREHENSiVE iNCOME FOR THE FiNANCiAL YEAR ENDED 28 FEBRUARY 2021

Note 2021 2020 RM RM

iNVESTMENT iNCOME

Dividend income 805,814 512,516Interest income 622,005 708,171Net gain from investments:

- Financial assets at fair value through profit or loss (“FVTPL”) 4 9,774,051 1,834,757

12,201,870 3,055,444

EXPENSES

Manager’s fee 5 687,659 563,745Trustee’s fee 6 22,922 18,791Auditors’ remuneration 9,600 9,600Tax agent’s fee 4,000 4,000Administrative expenses 29,016 37,491Brokerage and other transaction costs 189,350 177,351 942,547 810,978

NET iNCOME BEFORE TAX 10,259,323 2,244,466

Income tax 7 - -

NET iNCOME AFTER TAX, REPRESENTiNGTOTAL COMPREHENSiVE iNCOME FORTHE FiNANCiAL YEAR 10,259,323 2,244,466

Net income after tax is made up as follows:Realised gain 3,128,904 1,031,208Unrealised gain 4 7,130,419 1,213,258

10,259,323 2,244,466



7.2 STATEMENT OF FiNANCiAL POSiTiON AS AT 28 FEBRUARY 2021


ASSETS

iNVESTMENTS

Financial assets at FVTPL 4 51,506,008 34,334,757Short term deposits 8 10,683,000 3,425,000 62,189,008 37,759,757

OTHER ASSETS

Amount due from Manager 9,993,749 -Amount due from licensed financial institutions 9 - 177,983Other receivables 10 7,807 3,995Cash at bank 37,262 12,728 10,038,818 194,706

TOTAL ASSETS 72,227,826 37,954,463

LiABiLiTiES

Amount due to Manager - 27,191Amount due to Trustee 2,189 1,487Amount due to licensed financial institutions 9 622,323 -Other payables 11 47,670 33,900TOTAL LiABiLiTiES 672,182 62,578

EQUiTY

Unit holders’ contribution 56,352,665 32,948,229Retained earnings 15,202,979 4,943,656

NET ASSET VALUE (“NAV”) ATTRiBUTABLE TO UNiT HOLDERS 12 71,555,644 37,891,885

TOTAL LiABiLiTiES AND EQUiTY 72,227,826 37,954,463

NUMBER OF UNiTS iN CiRCULATiON 12(a) 131,726,824 88,019,865

NET ASSET VALUE PER UNiT (RM) 13 0.5432 0.4305



7.3 STATEMENT OF CHANGES iN NET ASSET VALUE FOR THE FiNANCiAL YEAR ENDED 28 FEBRUARY 2021

Unit holders’ Retained Note contribution earnings Total NAV RM RM RM

2021At beginning of the financial

year 32,948,229 4,943,656 37,891,885Total comprehensive income - 10,259,323 10,259,323Creation of units 12(a) 27,402,998 - 27,402,998Cancellation of units 12(a) (5,274,472) - (5,274,472)Distribution equalisation 12(a) 1,275,910 - 1,275,910At end of the financial year 56,352,665 15,202,979 71,555,644

2020At beginning of the financial

year 32,910,051 2,699,190 35,609,241Total comprehensive income - 2,244,466 2,244,466Creation of units 12(a) 4,005,489 - 4,005,489Cancellation of units 12(a) (3,964,119) - (3,964,119)Distribution equalisation 12(a) (3,192) - (3,192)At end of the financial year 32,948,229 4,943,656 37,891,885



7.4 STATEMENT OF CASH FLOWS FOR THE FiNANCiAL YEAR ENDED 28 FEBRUARY 2021

2021 2020 RM RM

CASH FLOWS FROM OPERATiNG AND iNVESTiNG ACTiViTiES

Proceeds from sale of financial assets at FVTPL 26,775,348 31,159,784Interest received 779,471 712,601Dividends received 618,307 508,919Tax agent’s fee paid - (4,000)Auditors’ remuneration paid (10,100) (9,600)Payment for other fees and expenses (13,043) (26,028)Trustee’s fee paid (22,220) (18,666)Manager’s fee paid (666,590) (560,010)Purchase of financial assets at FVTPL (33,541,066) (31,351,282)Net cash (used in)/generated from operating and

investing activities (6,079,893) 411,718

CASH FLOWS FROM FiNANCiNG ACTiViTiES

Cash received from units created 18,760,028 4,046,444Cash paid on units cancelled (5,397,601) (4,010,668)Net cash generated from financing activities 13,362,427 35,776

NET iNCREASE iN CASH AND CASHEQUiVALENTS 7,282,534 447,494

CASH AND CASH EQUiVALENTS AT BEGiNNiNG OF THE FiNANCiAL YEAR 3,437,728 2,990,234

CASH AND CASH EQUiVALENTS AT END OF THE FiNANCiAL YEAR 10,720,262 3,437,728

Cash and cash equivalents comprise:Cash at bank 37,262 12,728Short term deposits 10,683,000 3,425,000

10,720,262 3,437,728


7.5 NOTES TO THE FiNANCiAL STATEMENTS FOR THE FiNANCiAL YEAR ENDED 28 FEBRUARY 2021

1. THE FUND, THE MANAGER AND THEiR PRiNCiPAL ACTiViTiES

kenanga Balanced Fund (“the Fund”) was constituted pursuant to the executed Master Deed dated 30 April 2001 (collectively, together with deeds supplemental thereto, referred to as “the Deed”) between the Manager, kenanga Investors Berhad, and HSBC (Malaysia) Trustee Berhad (“the Trustee” prior to 3 December 2013) as the Trustee. The Fund has changed its trustee to CIMB Commerce Trustee Berhad (“the Trustee” with effect from 3 December 2013). The aforesaid change was effected on 3 December 2013 via a Fourth Master Supplemental Deed dated 19 November 2013. The Fund commenced operations on 23 May 2001 and will continue to be in operation until terminated as provided under Part 12 of the Deed.

kenanga Investors Berhad is a wholly-owned subsidiary of kenanga Investment Bank Berhad that is listed on the Main Market of Bursa Malaysia Securities Berhad. All of these companies are incorporated in Malaysia.

The principal place of business of the Manager is Level 14, kenanga Tower, 237, Jalan Tun Razak, 50400 kuala Lumpur.

The Fund seeks to provide a portfolio of investments with lower risk and lower volatility for investors.

The financial statements were authorised for issue by the Chief Executive Officer of the Manager on 31 May 2021.

2. FiNANCiAL RiSK MANAGEMENT OBJECTiVES AND POLiCiES

The Fund is exposed to a variety of risks including market risk (which includes interest rate risk and price risk), credit risk and liquidity risk. Whilst these are the most important types of financial risks inherent in each type of financial instruments, the Manager and the Trustee would like to highlight that this list does not purport to constitute an exhaustive list of all the risks inherent in an investment in the Fund.

The Fund has an approved set of investment guidelines and policies as well as internal controls which sets out its overall business strategies to manage these risks to optimise returns and preserve capital for the unit holders, consistent with the long term objectives of the Fund.

a. Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk includes interest rate risk and price risk.

Market risk arises when the value of the investments fluctuates in response to the activities of individual companies, general market or economic conditions. It stems from the fact that there are economy-wide perils, which threaten all businesses. Hence, investors are exposed to market uncertainties. Fluctuation in the investments’ prices caused by uncertainties in the economic, political and social environment will affect the NAV of the Fund.


2. FiNANCiAL RiSK MANAGEMENT OBJECTiVES AND POLiCiES (CONTD.)

a. Market risk (contd.)

The Manager manages the risk of unfavourable changes in prices by cautious review of the investments and continuous monitoring of their performance and risk profiles.

i. interest rate risk

Interest rate risk refers to how the changes in the interest rate environment would affect the performance of Fund’s investments. Rate offered by the financial institutions will fluctuate according to the Overnight Policy Rate determined by Bank Negara Malaysia and this has direct correlation with the Fund’s investments in unlisted corporate bonds, unlisted quasi government bonds and short term deposits.

The Fund’s exposure to the interest rate risk is mainly confined to unlisted corporate bonds and unlisted quasi government bonds.

interest rate risk sensitivity

The following table demonstrates the sensitivity of the Fund’s income for the financial year to a reasonably possible change in interest rate, with all other variables held constant.

Effects on income Changes in rate for the financial year increase/(Decrease) (Loss)/Gain Basis points RM

2021Financial assets at FVTPL 5/(5) (38,760)/38,882

2020Financial assets at FVTPL 5/(5) (25,238)/25,310

In practice, the actual trading results may differ from the sensitivity analysis above and the difference could be material.


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ii. Price risk

Price risk is the risk of unfavourable changes in the fair values of listed equity securities, listed collective investment schemes and listed warrants. The Fund invests in listed equity securities, listed collective investment schemes and listed warrants which are exposed to price fluctuations. This may then affect the NAV of the Fund.

Price risk sensitivity

The Manager’s best estimate of the effect on the income for the financial year due to a reasonably possible change in investments in listed equity securities, listed collective investment schemes and listed warrants with all other variables held constant is indicated in the table below:

Effects on income Changes in price for the financial year increase/(Decrease) Gain/(Loss) points RM

2021Financial assets at FVTPL 5/(5) 16,996/(16,996)

2020Financial assets at FVTPL 5/(5) 10,730/(10,730)

In practice, the actual trading results may differ from the sensitivity analysis above and the difference could be material.

Price risk concentration

The following table sets out the Fund’s exposure and concentration to price risk based on its portfolio of financial instruments as at the reporting date.

Fair value Percentage of NAV 2021 2020 2021 2020 RM RM % %

Financial assets at FVTPL 33,992,698 21,459,336 47.5 56.6




ii. Price risk (contd.)

Price risk concentration (contd.)

The Fund’s concentration of price risk from the Fund’s listed equity securities, listed collective investment schemes and listed warrants analysed by sector is as follows:

Fair value Percentage of NAV 2021 2020 2021 2020 RM RM % %

Technology 12,320,010 3,670,617 17.2 9.7 Industrial Products

and Services 9,279,613 2,939,596 13.0 7.8 Health Care 3,826,335 1,923,996 5.3 5.1 Construction 2,231,164 1,866,159 3.1 4.9 Financial Services 2,123,134 1,552,648 3.0 4.1 Energy 1,584,789 3,077,378 2.2 8.1 Consumer Products

and Services 1,511,158 1,278,115 2.1 3.4 Utilities 1,116,495 1,259,544 1.6 3.3 Property - 1,684,411 - 4.4 Plantation - 535,680 - 1.4 Transportation

and Logistics - 438,124 - 1.2Telecommunications

and Media - 340,355 - 0.9 Real Estate

Investment Trusts - 892,591 - 2.3Warrants - 122 - - 33,992,698 21,459,336 47.5 56.6

b. Credit risk

Credit risk is the risk that the counterparty to a financial instrument will cause a financial loss to the Fund by failing to discharge an obligation. The Manager manages the credit risk by undertaking credit evaluation to minimise such risk.

i. Credit risk exposure

As at the reporting date, the Fund’s maximum exposure to credit risk is represented by the carrying amount of each class of financial asset recognised in the statement of financial position.

ii. Financial assets that are either past due or impaired

As at the reporting date, there are no financial assets that are either past due or impaired.



b. Credit risk (contd.)

iii. Credit quality of financial assets

The Fund invests only in unlisted corporate bonds and unlisted quasi government bonds with at least investment grade credit rating by a credit rating agency. The following table analyses the Fund’s portfolio of unlisted corporate bonds and unlisted quasi government bonds by rating category:

Financial assets at FVTPL

Percentage of total unlisted bonds Percentage of NAV 2021 2020 2021 2020 % % % %

RatingAAA 7.1 20.4 1.8 6.9AA1/AA+ 11.9 0 2.9 0AA2/AA 24.9 11.5 6.1 3.8AA3/AA- 22.7 11.8 5.5 4A1/A+ 23.3 41.7 5.7 14.2A2/A 4.5 11.4 1.1 3.8A3/A- 2.3 3.2 0.6 1.1BB2/BB* 3.3 0 0.8 0 100.0 100.0 24.5 33.8

* Refers to a corporate bond which was purchased at an investment grade credit rating prior to the current financial year. The said bond was subsequently downgraded by the rating agency to BB during the current financial year.

The Fund invests in deposits with financial institutions licensed under the Financial Services Act 2013 and Islamic Financial Services Act 2013. The following table analyses the licensed financial institutions by rating category:

Short term deposits

Percentage of total short term deposits Percentage of NAV 2021 2020 2021 2020 % % % %

RatingP1/MARC 100.0 100.0 14.9 9.0



b. Credit risk (contd.)

iv. Credit risk concentration

Concentration risk is monitored and managed based on sectoral distribution. The table below analyses the Fund’s portfolio of unlisted corporate bonds and unlisted quasi government bonds by sectoral distribution:

Percentage of total unlisted bonds Percentage of NAV 2021 2020 2021 2020 % % % %Infrastructure and

Utilities 32.1 13.0 7.9 4.4Diversified Holdings 28.2 - 6.9 -Finance 18.0 24.6 4.4 8.3Properties 15.8 13.9 3.9 4.7Industrial Products 5.9 48.5 1.4 16.4 100.0 100.0 24.5 33.8

c. Liquidity risk

Liquidity risk is defined as the risk that the Fund will encounter difficulty in meeting obligations associated with financial liabilities that are to be settled by delivering cash or another financial asset. Exposure to liquidity risk arises because of the possibility that the Fund could be required to pay its liabilities or cancel its units earlier than expected. The Fund is exposed to cancellation of its units on a regular basis. Units sold to unit holders by the Manager are cancellable at the unit holders’ option based on the Fund’s NAV per unit at the time of cancellation calculated in accordance with the Deed.

The liquid assets comprise cash, short term deposits with licensed financial institutions and other instruments, which are capable of being converted into cash within 7 days.

The following table analyses the maturity profile of the Fund’s financial assets and financial liabilities in order to provide a complete view of the Fund’s contractual commitments and liquidity.



c. Liquidity risk (contd.)

Above Above Up to 1 year - 5 year - Note 1 year 5 years 15 years Total RM RM RM RM

2021AssetsFinancial assets

at FVTPL 34,917,728 8,399,661 8,188,619 51,506,008Short term

deposits 10,683,000 - - 10,683,000Other assets 10,038,818 - - 10,038,818 i. 55,639,546 8,399,661 8,188,619 72,227,826

LiabilitiesOther liabilities ii. 624,512 - - 624,512

Equity iii. 71,555,644 - - 71,555,644

Liquidity gap (16,540,610) 8,399,661 8,188,619 47,670

2020AssetsFinancial assets

at FVTPL 22,541,447 5,716,915 6,076,395 34,334,757Short term

deposits 3,425,000 - - 3,425,000Other assets 194,706 - - 194,706 i. 22,736,153 5,716,915 6,076,395 34,529,463

LiabilitiesOther liabilities ii. 28,678 - - 28,678

Equity iii. 37,891,885 - - 37,891,885

Liquidity gap (11,759,410) 5,716,915 6,076,395 33,900

i. Financial assets

Analysis of financial assets at FVTPL into maturity groupings is based on the expected date on which these assets will be realised. The Fund’s investments in listed equity securities, listed collective investment schemes and listed warrants have been included in the “up to 1 year” category on the assumption that these are highly liquid investments which can be realised should all of the Fund’s unit holders’ equity be required to be redeemed. For other assets, the analysis into maturity groupings is based on the remaining period from the end of the reporting period to the contractual maturity date or if earlier, the expected date on which the assets will be realised.



c. Liquidity risk (contd.)

ii. Financial liabilities

The maturity grouping is based on the remaining period from the end of the reporting period to the contractual maturity date or if earlier, the date on which liabilities will be settled. When the counterparty has a choice of when the amount is paid, the liability is allocated to the earliest period in which the Fund can be required to pay.

iii. Equity

As the unit holders can request for redemption of their units, they have been categorised as having a maturity of “up to 1 year”. As a result, it appears that the Fund has a liquidity gap within “up to 1 year”. However, the Fund believes that it would be able to liquidate its investments should the need arises to satisfy all the redemption requirements.

d. Regulatory reportings

It is the Manager’s responsibility to ensure full compliance of all requirements under the Guidelines on Unit Trust Funds issued by Securities Commission Malaysia. Any breach of any such requirement has been reported in the mandatory reporting to Securities Commission Malaysia on a monthly basis.

3. SUMMARY OF SiGNiFiCANT ACCOUNTiNG POLiCiES

a. Basis of accounting

The financial statements of the Fund have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRS”) as issued by the Malaysian Accounting Standards Board (“MASB”) and International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

The financial statements have been prepared on the historical cost basis except as disclosed in the accounting policies below.

The accounting policies adopted are consistent with those of the previous financial year except for the adoption of the amended MFRS and Interpretation Committee’s (“IC”) Interpretations, which became effective for the Fund on 1 March 2020.

Effective for financial period beginning on Description or after

Amendments to MFRS 2: Share-Based Payments 1 January 2020Amendment to MFRS 3: Business Combination 1 January 2020Amendments to MFRS 3: Definition of a Business 1 January 2020Amendments to MFRS 6: Exploration for and Evaluation

of Mineral Resources 1 January 2020Amendment to MFRS 14: Regulatory Deferral Accounts 1 January 2020


3. SUMMARY OF SiGNiFiCANT ACCOUNTiNG POLiCiES (CONTD.)

a. Basis of accounting (contd.)

Effective for financial period beginning on Description or after

Amendments to MFRS 101: Presentation of Financial Statements 1 January 2020Amendments to MFRS 108: Accounting Policies, Changes in

Accounting Estimates and Errors 1 January 2020Amendments to MFRS 101 and MFRS 108: Definition of Material 1 January 2020Amendments to MFRS 134: Interim Financial Reporting 1 January 2020Amendment to MFRS 137: Provisions, Contingent Liabilities and

Contingent Assets 1 January 2020Amendment to MFRS 138: Intangible Assets 1 January 2020Amendment to IC Interpretation 12: Service Concession

Arrangements 1 January 2020Amendment to IC Interpretation 19: Extinguishing Financial

Liabilities with Equity Instruments 1 January 2020Amendments to IC Interpretation 20: Stripping Costs in the

Production Phase of a Surface Mine 1 January 2020Amendment to IC Interpretation 22: Foreign Currency

Transactions and Advance Consideration 1 January 2020Amendments to IC Interpretation 132: Intangible Assets

- Web Site Costs 1 January 2020Amendments to MFRS 9, MFRS 139 and MFRS 7:

Interest Rate Benchmark Reform 1 January 2020

The adoption of the amended MFRS and IC Interpretations did not have any significant impact on the financial position or performance of the Fund.

b. Standards and amendments issued but not yet effective

As at the reporting date, the following new standard and amendments to standards that have been issued by MASB will be effective for the Fund in future financial periods. The Fund intends to adopt the relevant standards and interpretations when they become effective.

Effective for financial periods beginning on Description or after

Amendments to MFRS 16: Covid-19-Related Rent Concessions 1 June 2020Amendments to MFRS 4: Extension of the Temporary Exemption

from Applying MFRS 9 17 August 2020Amendments to MFRS 9, MFRS 139, MFRS 7, MFRS 4 and

MFRS 16: Interest Rate Benchmark Reform – Phase 2 1 January 2021Amendments to MFRS 16: Covid-19-Related Rent Concessions

beyond 30 June 2021 1 April 2021Amendments to MFRS contained in the document entitled

“Annual Improvements to MFRS Standards 2018 - 2020 Cycle” 1 January 2022



b. Standards and amendments issued but not yet effective (contd.)

Effective for financial periods beginning on Description or after

Amendments to MFRS 1: Subsidiary as a First-time Adopter contained in the document entitled “Annual Improvements to MFRS Standards 2018 - 2020 Cycle” 1 January 2022

Amendments to MFRS 9: Fees in the ‘10 per cent’ Test for Derecognition of Financial Liabilities contained in the document entitled “Annual Improvements to MFRS Standards 2018 - 2020 Cycle” 1 January 2022

Amendments to Illustrative Examples accompanying MFRS 16: Lease Incentives contained in the document entitled “Annual Improvements to MFRS Standards 2018 - 2020 Cycle” 1 January 2022

Amendments to MFRS 141: Taxation in Fair Value Measurements contained in the document entitled “Annual Improvements to MFRS Standards 2018 - 2020 Cycle” 1 January 2022

Amendments to MFRS 3: Reference to the Conceptual Framework 1 January 2022Amendments to MFRS 116: Property, Plant and Equipment

- Proceeds before Intended Use 1 January 2022Amendments to MFRS 137: Onerous Contracts − Cost of Fulfilling

a Contract 1 January 2022MFRS 17: Insurance Contracts 1 January 2023Amendments to MFRS 17: Insurance Contracts 1 January 2023Amendments to MFRS 101: Classification of Liabilities as Current

or Non-current 1 January 2023Amendments to MFRS 101: Disclosure of Accounting Policies 1 January 2023Amendments to MFRS 108: Definition of Accounting Estimates 1 January 2023Amendments to MFRS 10 and MFRS 128: Sale or Contribution To be announced

of Assets between an Investor and its Associate or Joint Venture by MASB

These pronouncements are not expected to have any significant impact to the financial statements of the Fund upon their initial application.

c. Financial instruments

Financial assets and liabilities are recognised in the statement of financial position when, and only when, the Fund becomes a party to the contractual provisions of the financial instruments.

i. initial recognition

The classification of financial instruments at initial recognition depends on their contractual terms and the business model for managing the instruments, as described in Notes 3(c)(ii) and (iii).

ii. Measurement categories of financial assets and liabilities

The Fund classifies all of its financial assets based on the business model for managing the assets and the asset’s contractual terms, measured at either:



c. Financial instruments (contd.)

ii. Measurement categories of financial assets and liabilities (contd.)

• Amortised cost;• Fair value through other comprehensive income; and• Fair value through profit or loss.

The Fund may designate financial instruments at FVTPL, if so doing eliminates or significantly reduces measurement or recognition inconsistencies.

The Fund’s other financial assets include cash at bank, short term deposits, trade receivables and other receivables.

Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability. Financial liabilities are classified as either financial liabilities at FVTPL or other financial liabilities.

The Fund’s other financial liabilities include trade payables and other payables.

Other financial liabilities are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest rate (“EIR”). Gains or losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.

iii. Due from banks, short term deposits, trade receivables and other receivables at amortised cost

The Fund only measures the cash at bank, short term deposits, trade receivables and other receivables at amortised cost if both of the following conditions are met:

• The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and

• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest (“SPPI”) on the principal amount outstanding.

The details of these conditions are outlined below.

Business model assessment

The Fund determines its business model at the level that best reflects how it manages groups of financial assets to achieve its business objective.

The Fund’s business model is not assessed on an instrument-by-instrument basis, but at a higher level of aggregated portfolios and is based on observable factors such as:

• How the performance of the business model and the financial assets held within that business model are evaluated and reported to the entity’s key management personnel;

• The risks that affect the performance of the business model (and the financial assets held within that business model) and, in particular, the way those risks are managed;



c. Financial instruments (contd.)

iii. Due from banks, short term deposits, trade receivables and other receivables at amortised cost (contd.)

Business model assessment (contd.)

• How managers of the business are compensated (for example, whether the compensation is based on the fair value of the assets managed or on the contractual cash flows collected); and

• The expected frequency, value and timing of sales are also important aspects of the Fund’s assessment.

The business model assessment is based on reasonably expected scenarios without taking ‘worst case’ or ‘stress case’ scenarios into account. If cash flows after initial recognition are realised in a way that is different from the Fund’s original expectations, the Fund does not change the classification of the remaining financial assets held in that business model but incorporates such information when assessing newly originated or newly purchased financial assets going forward, unless it has been determined that there has been a change in the original business model.

The SPPi test

As a second step of its classification process, the Fund assesses the contractual terms of financial assets to identify whether they meet the SPPI test.

‘Principal’ for the purpose of this test is defined as the fair value of the financial asset at initial recognition and may change over the life of the financial asset (for example, if there are repayments of principal or amortisation/accretion of the premium/discount).

The most significant elements of interest within a lending arrangement are typically the consideration for the time value of money and credit risk. To make the SPPI assessment, the Fund applies judgment and considers relevant factors such as the currency in which the financial asset is denominated, and the period for which the interest rate is set.

In contrast, contractual terms that introduce a more than de minimis exposure to risks or volatility in the contractual cash flows that are unrelated to a basic lending arrangement do not give rise to contractual cash flows that are solely payments of principal and interest on the amount outstanding. In such cases, the financial asset is required to be measured at FVTPL.

iv. Financial investments

Financial assets in this category are those that are managed in a fair value business model, or that have been designated by management upon initial recognition, or are mandatorily required to be measured at fair value under MFRS 9. This category includes debt instruments whose cash flow characteristics fail the SPPI criterion or are not held within a business model whose objective is either to collect contractual cash flows, or to both collect contractual cash flows and sell.



d. Derecognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when the rights to receive cash flows from the financial asset have expired. The Fund also derecognises the financial asset if it has both transferred the financial asset and the transfer qualifies for derecognition.

The Fund has transferred the financial asset if, and only if, either:

• The Fund has transferred its contractual rights to receive cash flows from the financial asset; or

• It retains the rights to the cash flows but has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass–through’ arrangement.

Pass-through arrangements are transactions whereby the Fund retains the contractual rights to receive the cash flows of a financial asset (the ‘original asset’), but assumes a contractual obligation to pay those cash flows to one or more entities (the ‘eventual recipients’), when all of the following three conditions are met:

• The Fund has no obligation to pay amounts to the eventual recipients unless it has collected equivalent amounts from the original asset, excluding short term advances with the right to full recovery of the amount lent plus accrued interest at market rates;

• The Fund cannot sell or pledge the original asset other than as security to the eventual recipients; and

• The Fund has to remit any cash flows it collects on behalf of the eventual recipients without material delay. In addition, the Fund is not entitled to reinvest such cash flows, except for investments in cash or cash equivalents including interest earned, during the period between the collection date and the date of required remittance to the eventual recipients.

A transfer only qualifies for derecognition if either:

• The Fund has transferred substantially all the risks and rewards of the asset; or• The Fund has neither transferred nor retained substantially all the risks and rewards

of the asset but has transferred control of the asset.

The Fund considers control to be transferred if and only if, the transferee has the practical ability to sell the asset in its entirety to an unrelated third party and is able to exercise that ability unilaterally and without imposing additional restrictions on the transfer.

When the Fund has neither transferred nor retained substantially all the risks and rewards and has retained control of the asset, the asset continues to be recognised only to the extent of the Fund’s continuing involvement, in which case, the Fund also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Fund has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration the Fund could be required to pay.



d. Derecognition of financial assets (contd.)

If continuing involvement takes the form of a written or purchased option (or both) on the transferred asset, the continuing involvement is measured at the value the Fund would be required to pay upon repurchase. In the case of a written put option on an asset that is measured at fair value, the extent of the entity’s continuing involvement is limited to the lower of the fair value of the transferred asset and the option exercise price.

e. Offsetting of financial assets and liabilities

Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis and to realise the assets and settle the liabilities simultaneously.

f. impairment of financial assets

i. Overview of the expected credit loss (“ECL”) principles

The Fund measure its loan and receivable impairment using the forward-looking ECL approach in accordance with the requirements of MFRS 9.

ii. Write-offs

Financial assets are written off either partially or in their entirety only when the Fund has stopped pursuing the recovery. If the amount to be written off is greater than the accumulated loss allowance, the difference is first treated as an addition to the allowance that is then applied against the gross carrying amount. Any subsequent recoveries are credited to credit loss expense.

g. income

Income is recognised to the extent that it is probable that the economic benefits will flow to the Fund and the income can be reliably measured. Income is measured at the fair value of consideration received or receivable.

Interest income which includes the accretion of discount and amortisation of premium on fixed income securities, is recognised using the effective interest method.

Dividend income is recognised on declared basis, when the right to receive the dividend is established.

The realised gain or loss on sale of investments is measured as the difference between the net disposal proceeds and the carrying amount of the investment.

h. Cash and cash equivalents

For the purpose of the statement of cash flows, cash and cash equivalents include cash at bank and short term deposits with licensed financial institutions with maturities of three months or less, which have an insignificant risk of changes in value.



i. income tax

Income tax on the profit or loss for the financial year comprises current tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the financial year.

As no temporary differences have been identified, no deferred tax has been recognised.

j. Unrealised reserves

Unrealised reserves represent the net gain or loss arising from carrying investments at their fair values at reporting date. This reserve is not distributable.

k. Unit holders’ contribution – NAV attributable to unit holders

The unit holders’ contribution to the Fund is classified as equity instruments.

Distribution equalisation represents the average amount of undistributed net income included in the creation or cancellation price of units. This amount is either refunded to unit holders by way of distribution and/or adjusted accordingly when units are released back to the Trustee.

l. Functional and presentation currency

The financial statements of the Fund are measured using the currency of the primary economic environment in which the Fund operates (“the functional currency”). The financial statements are presented in Ringgit Malaysia (“RM”), which is also the Fund’s functional currency.

m. Distributions

Distributions are at the discretion of the Manager. A distribution to the Fund’s unit holders is accounted for as a deduction from retained earnings.

n. Significant accounting judgments and estimates

The preparation of financial statements requires the use of certain accounting estimates and exercise of judgment. Estimates and judgments are continually evaluated and are based on past experience, reasonable expectations of future events and other factors.

i. Critical judgments made in applying accounting policies

There are no major judgments made by the Manager in applying the Fund’s accounting policies.

ii. Key sources of estimation uncertainty

There are no key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.


4. FiNANCiAL ASSETS AT FVTPL

2021 2020 RM RM

Financial assets held for trading, at FVTPL:Listed equity securities 33,992,698 20,566,623Listed collective investment schemes - 892,591Listed warrants - 122Unlisted corporate bonds 17,513,310 11,642,606Unlisted quasi government bonds 1,232,815 - 51,506,008 34,334,757

Net gain on financial assets at FVTPL comprised:Realised gain on disposals 2,643,367 621,499Unrealised changes in fair values 7,131,789 1,213,258 9,775,156 1,834,757

Details of financial assets at FVTPL as at 28 February 2021:

Aggregate/ Amortised Percentage Quantity cost Fair value of NAV RM RM %

Listed equity securities

TechnologyFrontken Corporation Berhad 357,900 1,184,912 1,864,659 2.6Globetronics Technology

Berhad 322,033 778,584 917,794 1.3Greatech Technology Berhad 434,800 716,794 2,652,280 3.7Pentamaster Corporation

Berhad 312,575 970,007 1,966,097 2.7Unisem (M) Berhad 183,400 1,008,700 1,632,260 2.3UWC Berhad 509,600 1,309,670 3,286,920 4.6 5,968,667 12,320,010 17.2

industrial Products andServices

Asia Poly Holdings Bhd 1,594,500 597,017 510,240 0.7ATA IMS Berhad 357,400 821,522 993,572 1.4Dufu Technology Corp.

Berhad 460,200 1,143,158 1,863,810 2.6HPP Holdings Berhad 1,646,600 999,458 922,096 1.3kelington Group Berhad 458,500 549,480 1,082,060 1.5RGT Bhd 1,198,600 445,051 557,349 0.8Samaiden Group Berhad 420,000 429,778 722,400 1.0Sunway Berhad 1,104,675 1,705,948 1,657,012 2.3Thong Guan Industries

Berhad 439,400 1,297,666 971,074 1.4 7,989,078 9,279,613 13.0


4. FiNANCiAL ASSETS AT FVTPL (CONTD.)

Details of financial assets at FVTPL as at 28 February 2021: (contd.)


Listed equity securities(contd.)

Health CareHartalega Holdings Berhad 75,600 1,017,699 756,000 1.0kossan Rubber Industries

Berhad 164,900 547,671 651,355 0.9Optimax Holdings Berhad 642,800 446,786 867,780 1.2Supercomnet Technologies

Berhad 419,000 809,005 762,580 1.1Top Glove Corporation Bhd 150,500 575,735 788,620 1.1 3,396,896 3,826,335 5.3

ConstructionEconpile Holdings Berhad 919,500 473,543 395,385 0.6Gabungan AQRS Berhad 734,008 926,922 447,745 0.6kerjaya Prospek Group

Berhad 515,483 657,078 572,186 0.8MGB Berhad 927,100 808,189 815,848 1.1 2,865,732 2,231,164 3.1

Financial ServicesAllianz Malaysia Bhd 20,100 296,850 276,978 0.4Hong Leong Bank Berhad 41,800 622,347 752,400 1.1RHB Bank Berhad 201,800 998,408 1,093,756 1.5 1,917,605 2,123,134 3.0

EnergyDialog Group Berhad 167,700 522,417 541,671 0.8Hibiscus Petroleum Berhad 352,400 250,591 241,394 0.3Yinson Holdings Berhad 150,700 701,493 801,724 1.1 1,474,501 1,584,789 2.2

Consumer Products and Services

Focus Point Holdings Berhad 764,050 594,494 664,724 0.9Perak Transit Berhad 1,019,800 835,431 846,434 1.2 1,429,925 1,511,158 2.1

UtilitiesMega First Corporation Berhad 89,500 462,522 688,255 1.0Tenaga Nasional Berhad 42,400 506,932 428,240 0.6 969,454 1,116,495 1.6

Total listed equity securities 26,011,858 33,992,698 47.5


4. FiNANCiAL ASSETS AT FVTPL (CONTD.)

Details of financial assets at FVTPL as at 28 February 2021: (contd.)


Unlisted corporate bonds

Aman Sukuk Berhad maturing on 21/10/2021 330,000 334,191 339,042 0.5

Bank Muamalat Malaysia Berhad maturing on 15/06/2021 400,000 404,962 407,089 0.6

DRB-Hicom Berhad maturing on 11/12/2026 2,200,000 2,221,925 2,263,065 3.2

Fortune Premiere Sdn Bhd maturing on 05/09/2025 2,200,000 2,422,868 2,421,332 3.4

IJM Land Berhad maturing on 19/03/2027 730,000 748,221 785,692 1.1

Jati Cakerawala Sdn Bhd maturing on 31/07/2023 650,000 649,896 665,528 0.9

Malaysia Airports Capital Berhad maturing on 16/12/2022 330,000 334,754 344,841 0.5

MEX II Sdn Bhd maturing on 29/04/2026 650,000 672,892 570,935 0.8

Pelabuhan Tanjung PelepasSdn Bhd maturing on 28/08/2030 3,000,000 3,000,279 2,934,879 4.1

Premier Auto Assets Berhadmaturing on 19/07/2022 1,500,000 1,508,646 1,541,976 2.1

TG Excellence Berhad maturing on 27/02/2025 1,000,000 1,017,109 1,034,318 1.4

UMW Holdings Berhad maturing on 04/10/2023 680,000 700,577 734,815 1.0

UMW Holdings Berhadmaturing on 20/04/2028 1,000,000 1,171,900 1,157,276 1.6

Westports Malaysia Sdn Bhd maturing on 23/10/2025 500,000 547,331 547,854 0.8

Premier Auto Assets Berhad maturing on 19/07/2022 1,500,000 1,508,646 1,541,976 2.1

RHB Bank Berhadmaturing on 20/10/2025 1,200,000 1,212,181 1,210,297 1.7

Total unlisted corporate bonds 17,497,689 17,513,310 24.5

Total financial assets at FVTPL 43,509,547 51,506,008 72.0

Unrealised gain onfinancial assets at FVTPL 7,996,461


5. MANAGER’S FEE

The Manager’s fee is calculated on a daily basis at a rate not exceeding 2.00% per annum of the NAV of the Fund as provided under Division 13.1 of the Deed.

The Manager is currently charging Manager’s fee of 1.50% per annum of the NAV of the Fund (2020: 1.50% per annum).

6. TRUSTEE’S FEE

Pursuant to the Fifth Master Supplemental Deed dated 25 July 2014, the Trustee’s fee is calculated at a rate not exceeding 0.05% per annum of the NAV of the Fund effective from 1 August 2014.

The Trustee’s fee is currently calculated at 0.05% per annum of the NAV of the Fund (2020: 0.05% per annum).

7. iNCOME TAX

Income tax is calculated at the Malaysian statutory tax rate of 24% of the estimated assessable income for the current and previous financial years.

Income tax is calculated on investment income less partial deduction for permitted expenses as provided for under Section 63B of the Income Tax Act, 1967.

A reconciliation of income tax expense applicable to net income before tax at the statutory income tax rate to income tax expense at the effective income tax rate of the Fund is as follows:

2021 2020 RM RM

Net income before tax 10,259,323 2,244,466

Tax at Malaysian statutory tax rate of 24% (2020: 24%) 2,462,238 538,672Tax effect of:

Income not subject to tax (2,688,449) (733,307)Expenses not deductible for tax purposes 54,069 50,299Restriction on tax deductible expenses for unit trust

fund 172,142 144,336Income tax for the financial year - -


8. SHORT TERM DEPOSiTS

Short term deposits are held with licensed financial institutions in Malaysia at the prevailing interest rates.

9. AMOUNT DUE FROM/TO LiCENSED FiNANCiAL iNSTiTUTiONS

Amount due from/to licensed financial institutions relates to the amount to be received from or paid to licensed financial institutions arising from the sales and purchase of investments.

10. OTHER RECEiVABLES

2021 2020 RM RM

Dividend receivable 7,295 3,597Interest receivable from short term deposits 512 398 7,807 3,995

11. OTHER PAYABLES

2021 2020 RM RM

Accrual for auditors’ remuneration 8,500 9,000Accrual for tax agent’s fees 8,500 4,500Provision for printing and other expenses 30,670 20,400 47,670 33,900

12. NET ASSET VALUE ATTRiBUTABLE TO UNiT HOLDERS

NAV attributable to unit holders is represented by:


Unit holders’ contribution (a) 56,352,665 32,948,229

Retained earnings:Realised reserves 7,206,518 4,077,614Unrealised reserves 7,996,461 866,042 15,202,979 4,943,656

71,555,644 37,891,885


12. NET ASSET VALUE ATTRiBUTABLE TO UNiT HOLDERS (CONTD.)

(a) Unit holders’ contribution

2021 2020 No. of units RM No. of units RM

At beginning of the financial year 88,019,865 32,948,229 87,864,302 32,910,051

Add: Creation of units 55,629,050 27,402,998 9,562,017 4,005,489Less: Cancellation of

units (11,922,091) (5,274,472) (9,406,454) (3,964,119)Distribution equalisation - 1,275,910 - (3,192)At end of the financial

year 131,726,824 56,352,665 88,019,865 32,948,229

The number of units legally or beneficially held by the Manager, kenanga Investors Berhad and parties related to the Manager as at 28 February 2021 were nil (2020: nil).

13. NET ASSET VALUE PER UNiT

In accordance with the Deed, the calculation of NAV attributable to unit holders per unit for the creation and cancellation of units is computed based on financial assets at FVTPL valued at the last done market price. In the previous financial year, financial assets at FVTPL have been valued at the bid prices at the close of business.

A reconciliation of NAV attributable to unit holders for creation/cancellation of units and the NAV attributable to unit holders per the financial statements is as follows:

2021 2020 RM RM/Unit RM RM/Unit

NAV attributable to unit holders for creation/cancellation of units 71,555,644 0.5432 38,089,316 0.4327

Effects of adopting bid prices as fair value - - (197,431) (0.0022)

NAV attributable to unit holders per statement of financial position 71,555,644 0.5432 37,891,885 0.4305

14. PORTFOLiO TURNOVER RATiO (“PTR”)

PTR for the financial year is 0.66 times (2020: 0.82 times).

PTR is the ratio of average sum of acquisitions and disposals of investments of the Fund for the financial year to the average NAV of the Fund, calculated on a daily basis.


15. MANAGEMENT EXPENSE RATiO (“MER”)

MER for the financial year is 1.64% (2020: 1.69%).

MER is the ratio of total fees and recovered expenses of the Fund expressed as a percentage of the Fund’s average NAV, calculated on a daily basis.

16. TRANSACTiONS WiTH LiCENSED FiNANCiAL iNSTiTUTiONS

Brokerage, stamp duty Transaction Percentage and Percentage value of total clearing fee of total RM % RM %

RHB Investment Bank Berhad 14,260,474 24.0 16,780 12.1

Hong Leong Investment Bank Berhad 12,151,003 20.5 27,872 20.2

Maybank Investment Bank Berhad 6,902,250 11.6 21,929 15.9

CIMB Investment Bank Berhad 6,827,937 11.5 20,173 14.6

kenanga Investment Bank Berhad* 5,785,423 9.7 16,359 11.8

UOB kay Hian Securities (M) Sdn Bhd 5,401,754 9.1 15,122 10.9

Affin Hwang InvestmentBank Berhad 2,851,036 4.8 8,246 6.0

Public Investment Bank Berhad 2,438,914 4.1 6,517 4.7

United Overseas Bank (Malaysia) Berhad 1,007,411 1.7 - -

TA Securities Holdings Berhad 947,127 1.6 2,575 1.9

Others 841,934 1.4 2,645 1.9 59,415,263 100.0 138,218 100.0

* kenanga Investment Bank Berhad is a related party of kenanga Investors Berhad.

The above transaction values are in respect of listed equity securities, listed collective investment schemes, unlisted warrants, unlisted corporate bonds and unlisted quasi government bonds. Transactions in unlisted corporate bonds and unlisted quasi government bonds not involve any commission or brokerage fees.

The directors of the Manager are of the opinion that the transactions with the related party 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. The Manager is of the opinion that the above dealings have been transacted on an arm’s length basis.


17. SEGMENTAL REPORTiNG

a. Business segments

In accordance with the objective of the Fund, the Fund can invest up to 60% in listed Malaysian investment securities and up to 40% in fixed income instruments. The following table provides an analysis of the Fund’s revenue, results, assets and liabilities by business segments:

Listed Unlisted investment investment Other securities securities investment Total RM RM RM RM

2021RevenueSegment income 10,623,403 460,187 118,280Segment expenses (189,350) - -Net segment income

representing segmentresults 10,434,053 460,187 118,280 11,012,520

Unallocated expenditure (753,197)

Income before tax 10,259,323Income tax -Net income after tax 10,259,323

AssetsFinancial assets at

FVTPL 33,992,698 17,513,310 -Short term deposits - - 10,683,000Other segment assets 7,295 - 512Total segment assets 33,999,993 17,513,310 10,683,512 62,196,815Unallocated assets 10,031,011 72,227,826

LiabilitiesSegment liabilities 622,323 - - 622,323Unallocated liabilities 49,859 672,182


17. SEGMENTAL REPORTiNG (CONTD.)

a. Business segments (contd.)

Listed Unlisted investment investment Other securities securities investment Total RM RM RM RM

2020RevenueSegment income 2,049,134 878,527 127,783Segment expenses (177,351) - -Net segment income

representing segmentresults 1,871,783 878,527 127,783 2,878,093

Unallocated expenditure (633,627)

Income before tax 2,244,466Income tax -Net income after tax 2,244,466

AssetsFinancial assets at

FVTPL 21,459,336 12,875,421 -Short term deposits - - 3,425,000Other segment assets 181,580 - 398Total segment assets 21,640,916 12,875,421 3,425,398 37,941,735Unallocated assets 12,728 37,954,463

LiabilitiesSegment liabilities 62,578

b. Geographical segments

As all of the Fund’s investments are located in Malaysia, disclosure by geographical segments is not relevant.

18. FiNANCiAL iNSTRUMENTS

a. Classification of financial instruments

The Fund’s financial assets and financial liabilities are measured on an ongoing basis at either fair value or at amortised cost based on their respective classification. The significant accounting policies in Note 3 describe how the classes of financial instruments are measured, and how income and expenses, including fair value gains and losses, are recognised.

The following table analyses the financial assets and financial liabilities of the Fund in the statement of financial position by the class of financial instruments to which they are assigned and therefore by the measurement basis.


18. FiNANCiAL iNSTRUMENTS (CONTD.)

a. Classification of financial instruments (contd.)

Financial Financial assets at Other assets at amortised financial FVTPL cost liabilities Total RM RM RM RM

2021AssetsListed equity securities 33,992,698 - - 33,992,698Unlisted corporate

bonds 17,513,310 - - 17,513,310Short term deposits - 10,683,000 - 10,683,000Amount due from

Manager - 9,993,749 - 9,993,749Other receivables - 7,807 - 7,807Cash at bank - 37,262 - 37,262 51,506,008 20,721,818 - 72,227,826

LiabilitiesAmount due to Manager - - 2,189 2,189Amount due to licensed

financial institutions - - 622,323 622,323 - - 624,512 624,512

2020AssetsListed equity securities 20,566,623 - - 20,566,623Listed collective

investment schemes 892,591 - - 892,591Listed warrants 122 - - 122Unlisted corporate

bonds 11,642,606 - - 11,642,606Unlisted quasi

government bonds 1,232,815 - - 1,232,815Short term deposits - 3,425,000 - 3,425,000Amount due from

licensed financial institutions - 177,983 - 177,983

Other receivables - 3,995 - 3,995Cash at bank - 12,728 - 12,728 34,334,757 3,619,706 - 37,954,463

LiabilitiesAmount due to Manager - - 27,191 27,191Amount due to Trustee - - 1,487 1,487 - - 28,678 28,678


18. FiNANCiAL iNSTRUMENTS (CONTD.)

b. Financial instruments that are carried at fair value

The Fund’s financial assets at FVTPL are carried at fair value.

The following table shows the fair value measurements by level of the fair value measurement hierarchy:

Level 1 Level 2 Level 3 Total RM RM RM RM

investments:2021Listed equity securities 33,992,698 - - 33,992,698Unlisted corporate

bonds - 17,513,310 - 17,513,310

2020Listed equity securities 20,566,623 - - 20,566,623Listed collective

investment schemes 892,591 - - 892,591Listed warrants 122 - - 122Unlisted corporate

bonds - 11,642,606 - 11,642,606Unlisted quasi

government bonds - 1,232,815 - 1,232,815

Level 1: Listed prices in active marketLevel 2: Model with all significant inputs which are observable market dataLevel 3: Model with inputs not based on observable market data

The fair values of listed equity securities are determined by reference to Bursa Malaysia Securities Berhad’s last prices at reporting date. In the previous financial year, the fair values of listed equity securities, listed collective investment schemes and listed warrants were determined by reference to Bursa Malaysia Securities Berhad’s bid prices at reporting date.

The fair values of unlisted corporate bonds and unlisted quasi government bond are based on marked-to-market prices provided by bond pricing agency accredited by Securities Commission of Malaysia at reporting date.

c. Financial instruments not carried at fair value and which their carrying amounts are reasonable approximations of fair value

The carrying amounts of the Fund’s other financial assets and financial liabilities are not carried at fair value but approximate fair values due to the relatively short term maturity of these financial instruments.


19. CAPiTAL MANAGEMENT

The capital of the Fund can vary depending on the demand for creation and cancellation of units to the Fund.

The Fund’s objectives for managing capital are:

a. To invest in investments meeting the description, risk exposure and expected return indicated in its prospectus;

b. To maintain sufficient liquidity to meet the expenses of the Fund, and to meet cancellation requests as they arise; and

c. To maintain sufficient fund size to make the operations of the Fund cost-efficient.

No changes were made to the capital management objectives, policies or processes during the current and previous financial years.

20. SiGNiFiCANT EVENT

The COVID-19 pandemic has significantly disrupted many business operations around the world. For the Fund, the impact on business operations has not been a direct consequence of the COVID-19 outbreak, but a result of the measures taken by the Government of Malaysia to contain it. As the outbreak continues to evolve, it is challenging to predict the full extent and duration of its impact on business and the economy.

While the Fund is not able to fully ascertain on the financial impact of the COVID-19 outbreak at the date of this report, it is anticipated based on initial assessments performed, that there have not been any circumstances that would require adjustments to be made to the carrying values of the assets and liabilities of the Fund as at 28 February 2021. The Fund holds sufficient capital and will continue to prudently manage risks while implementing cost reduction measures in order to ensure that it remains resilient through this period of uncertainty.

21. SUBSEQUENT EVENT

On 9 April 2021, the Fund has declared an income distribution amounting to RM5,923,987 to its unit holders and the gross/net distribution per unit was RM0.0443.


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