KeNaNGa - icbc chiNa fOcuS iNcOme fuNd · E-mail:[email protected] Website: ... Level 13, Menara CIMB Jalan Stesen Sentral 2 Kuala Lumpur Sentral 50490 Kuala Lumpur

Quarterly rePOrt

30 SePtember 2017

KeNaNGa - icbc chiNa fOcuS iNcOme fuNd

KeNaNGa - icbc chiNa fOcuS iNcOme fuNd

Contents Page

corporate directory ii Directory of Manager’s Offices iiifund information 1manager’s report 2 - 3fund Performance 4 - 6financial Statements 7 - 14

ii Kenanga - ICBC China Focus Income Fund Quarterly Report

cOrPOrate directOrymanager: Kenanga investors berhad (Company No. 353563-P)

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

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

board Of directorsDatuk Syed Ahmad Alwee Alsree (chairman)Syed Zafilen Syed Alwee (independent

director)Peter John Rayner (independent director)Imran Devindran bin Abdullah (independent

director)Dato’ Bruce Kho Yaw HuatIsmitz Matthew De Alwis

investment committee Dato’ Bruce Kho Yaw Huat (chairman) Syed Zafilen Syed Alwee (independent

member)Peter John Rayner (independent member)Imran Devindran bin Abdullah (independent

member)Ismitz Matthew De Alwis

company Secretary: Norliza abd Samad (MAICSA 7011089)

Level 17, Kenanga Tower, 237, Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia

trustee: cimb commerce trustee berhad (Company No. 313031-A)

Registered Office Level 13, Menara CIMBJalan Stesen Sentral 2Kuala Lumpur Sentral50490 Kuala Lumpur.Tel: 03-2261 8888Fax: 03-2261 0099Website: www.cimb.com

Business Office Level 21, Menara CIMBJalan Stesen Sentral 2Kuala Lumpur Sentral50490 Kuala Lumpur.Tel: 03-2261 8888Fax: 03-2261 9889

auditor: ernst & young (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. 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 - ICBC China Focus Income Fund Quarterly Report iii

directOry Of maNaGer’S OfficeSRegional Branch Offices :

Kuala lumpurLevel 13, Kenanga Tower,237, Jalan Tun Razak,50400 Kuala Lumpur, Malaysia.Tel: 03-2172 3123 Fax: 03-2172 3133

Johor bahruLot 11.03, 11th Floor, Menara MSC CyberportNo. 5, Jalan Bukit Meldrum80300 Johor Bahru , JohorTel: 07-223 7505 / 4798 Fax: 07-223 4802

melakaNo. 25-1, Jalan Kota Laksamana 2/17Taman Kota Laksamana, Seksyen 275200 MelakaTel: 06-281 8913 / 06-282 0518Fax: 06-281 4286

Kuching1st Floor, No 71Lot 10900, Jalan Tun Jugah93350 Kuching, SarawakTel: 082-572 228 Fax: 082-572 229

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

KuantanNo. B8, Ground Floor, Jalan Tun Ismail 125000 Kuantan Pahang.Tel : 09-514 3688Fax : 09-514 3838

Penang5.04, 5th Floor, Menara Boustead Penang No. 39, Jalan Sultan Ahmad Shah 10050 Penang. Tel : 04-210 6628Fax : 04-210 6644

ipohSuite 1, 2nd Floor,No. 63, Persiaran Greenhill,30450 Ipoh, Perak, MalaysiaTel: 05-254 7573 / 7570 / 7575Fax: 05-254 7606

miri 2nd Floor, Lot 1264, Centre Point Commercial Centre, Jalan Melayu, 98000 Miri, Sarawak Tel: 085-416 866 Fax: 085-322 340

Kota KinabaluA-03-11, 3rd FloorBlock A, Warisan SquareJalan Tun Fuad Stephens88000 Kota Kinabalu, SabahTel: 088-447 089 / 088-448 106 Fax: 088-447 039

Seremban 2nd Floor, No. 1D-2, Jalan Tuanku Munawir 70000 Seremban, Negeri Sembilan Tel: 06-761 5678 Fax: 06-761 2242

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

1 Kenanga - ICBC China Focus Income Fund Quarterly Report

1. fuNd iNfOrmatiON

1.1 fund Name

Kenanga-icbc china focus income fund (Kicfif or the fund)

1.2 fund type / category

Growth / Mixed Asset (feeder)

1.3 investment Objective

The Fund seeks to provide long-term capital growth by investing in the Target Fund.

1.4 investment Strategy

The Fund will invest at least 95% of the Fund’s NAV in Shares class A of the Target Fund, while the remaining of the Fund’s NAV will be invested in liquid assets.

1.5 asset allocation

Minimum 95% of the NAV to be invested in the Target Fund and maximum 5% of the NAV to be invested in liquid assets comprising money market instruments and deposits with financial institutions.

1.6 duration

The Fund was launched on 1 October 2015 and it shall exist as long as it appears to the Manager and the Trustee that it is in the interests of the unitholders for it to continue.

1.7 Performance benchmark

3.8% growth in NAV per annum.

1.8 distribution Policy

There will be no distribution of income.

Kenanga - ICBC China Focus Income Fund Quarterly Report 2

2. maNaGer’S rePOrt

2.1 fund performance analysis based on NaV per unit (adjusted for income distribution) since last review period

Kenanga-icbc china focus income fundPeriod under

review- RMB CLASS -1.23%- USD CLASS -

Source: Lipper

For the financial period from 30 June 2017 to 30 September 2017, the Fund registered a performance of -1.23%

2.2 the fund’s asset allocation as at 30 September 2017 and comparison with the previous financial period

asset30 September

201730 September

2016Collective investment scheme - foreign 95.8% 96.7%Cash and others 4.2% 3.3%

2.3 market review and Strategy

Onshore Domestic bonds yields rose before declined in the third quarter, during the whole quarter, interest rate bond yield saw a slight upward, while yield curve flattened after steepened at the beginning. The credit spread widened when liquidity tightened in late August, but started to reverse in mid-September.

From market perspective, chances of the central bank taking initiative to loosen liquidity was quite low. From the policy aspect, with stable economic performance and low possibility of downside risk, further de-leveraging and financial regulation risk will persist. Short-term economic data had a chance to outperform market consensus, while we still need to be cautious with the fund position In a medium term, the economy has no obvious upward trend, mid to long-term bond configuration opportunities still exist, opportunities are along with higher yield positioning change.

Macroeconomy stabilized with a slight decline in the third quarter, economic data saw a fall in July and August after a significant outperformance in June. Looking in the future, the cumulative growth rate of real estate investment during the year should still have room for some downward trend, and infrastructure invesment also has no big chance to rebound. The central bank may basically continue its neutral operation unless the economic data saw an obvious downturn, otherwise, probability of capital loosening is very slim.

In the offshore market, CNH outperformed in the third quarter on the back of weaker USD. In addition, the reversal of the expected depreciation of the Renminbi also led to more usage of the currency by companies. Yields of CNH bonds fell significantly, impacted by the onshore bond yields, we see limited rooms for further declining in the CNH bond yields. Furthermore, the central bank contracted offshore RMB market liquidity, with a shrinking CNH bond market, investors participation reduced significantly.

Source: ICBC (Asia) Investment Management Company Limited


2.4 income distribution

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

2.5 rebates & Soft commission

The Manager from time to time may receive rebates which are then paid to the Fund. During the financial period under review, the Manager did not receive rebates or soft commission from bankers, or any other source pursuant to transactions conducted by the Fund.


3. fuNd PerfOrmaNce

3.1 details of portfolio composition of Kenanga-icbc china focus income fund (“the Fund”) for the financial period as at 30 September 2017 against last financial period as at 31 december 2016 are as follow:

a. distribution among industry sectors and category of investments:

as at as at30.9.2017 31.12.2016

% %

Collective investment scheme - foreign 95.8 95.8Short term deposits and cash 4.2 4.2

100.0 100.0 Note The above mentioned percentages are based on total investment market value

plus cash.

b. distribution among markets

The Fund invests in foreign collective investment scheme and cash only.


3.2 Performance details of the Fund for the financial period ended 30 September 2017 against last financial period from 1 October 2015 (date of commencement) to 31 december 2016 are as follows:

financial period

1.1.2017 to 30.9.2017

financial period 1.10.2015

(date of commencement)

to 31.12.2016

Net asset value (“NAV”) (RMB Million)- RMB CLASS 1.46 1.60 - USD CLASS - -

Units in circulation (Million)- RMB CLASS 1.49 1.59 - USD CLASS - -

NAV per unit in RMB- RMB CLASS 0.9805 1.0081 - USD CLASS 6.6483 6.9401

NAV per unit in respective currencies- RMB CLASS (RMB) 0.9805 1.0081 - USD CLASS (USD) 1.0000 1.0000

Highest NAV per unit in respective currencies- RMB CLASS (RMB) 1.0081 1.0081 - USD CLASS (USD) 1.0000 1.0000

Lowest NAV per unit in respective currencies- RMB CLASS (RMB) 0.9773 1.0000 - USD CLASS (USD) 1.0000 1.0000

Total return (%)- RMB CLASS -2.74 0.81- USD CLASS - -

- Capital growth (%)- RMB CLASS -2.74 0.81- USD CLASS - -

- Income growth (%)- RMB CLASS - -- USD CLASS - -

Gross distribution per unit (sen)- RMB CLASS (RMB) - -- USD CLASS (USD) - -

Net distribution per unit (sen)- RMB CLASS (RMB) - -- USD CLASS (USD) - -

Management expense ratio (“MER”) (%) 1

- RMB CLASS 1.15 0.80 - USD CLASS - -

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

- RMB CLASS 0.03 0.99 - USD CLASS - -


Note: Total return is the actual return of the Fund for the respective financial periods,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.

Above NAV and NAV per unit are not shown as ex-distribution as there will be no distribution of income by the Fund in accordance to the distribution policy of the Fund as disclosed in the Information Memorandum.

1. MER is higher against previous financial periodmainly due to higher recoveredexpensesincurredduringthefinancialperiodunderreview.

2. PTRisloweragainstpreviousfinancialperiodmainlyduetoshorterperiodunderreview.


4. fiNaNcial StatemeNtS

4.1 StatemeNt Of cOmPreheNSiVe iNcOme fOr the fiNaNcial PeriOd frOm 1 JaNuary 2017 tO 30 SePtember 2017

(unaudited)

Note1.1.2017 to 30.9.2017

1.10.2015 (date of

commencement)to 30.9.2016

rmb rmb

iNVeStmeNt iNcOme

Interest income - 3,824 Net (loss)/gain from investments:- Financial assets at fair value through

profit or loss (“FVTPL”) 2 (29,020) 7,313 (29,020) 11,137

eXPeNSeS

Manager’s fee 3 11,497 8,524 Trustee’s fee 4 562 671 Administration expenses 1,409 873

13,468 10,068

Net (lOSS)/iNcOme befOre taX (42,488) 1,069

Income tax - -

Net (lOSS)/iNcOme after taX, rePreSeNtiNG tOtal cOmPreheNSiVe (lOSS)/iNcOme fOr the fiNaNcial PeriOd (42,488) 1,069

Net (loss)/income after tax is made up as follows:Realised loss (13,534) (6,244)Unrealised (loss)/gain 2 (28,954) 7,313

(42,488) 1,069

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


4.2 StatemeNt Of fiNaNcial POSitiON aS at 30 SePtember 2017 (unaudited)

Note 30.9.2017 30.9.2016rmb rmb

aSSetS

iNVeStmeNt

Financial assets at FVTPL 2 1,399,940 2,249,313

Other aSSetAmount due from Manager - 9,351Cash at bank 61,115 77,483

61,115 86,834

tOtal aSSetS 1,461,055 2,336,147

liabilitieS

Amount due to Manager 1,180 -Amount due to Trustee 58 95 Other payable 74 67 tOtal liabilitieS 1,312 162

eQuity

Unit holders’ contribution 1,491,449 2,334,916 (Accumulated loss)/Retained earning (31,706) 1,069 tOtal eQuity 1,459,743 2,335,985

tOtal liabilitieS aNd eQuity 1,461,055 2,336,147

Net aSSet Value (“NaV”) attributable tO uNit hOlderS- rmb claSS (rmb) 1,459,743 2,335,985 - uSd claSS (uSd) - -

5 1,459,743 2,335,985

Number Of uNitS iN circulatiON- rmb claSS (rmb) 5(a) 1,488,742 2,329,733 - uSd claSS (uSd) 5(b) - -

NaV Per uNit iN rmb- rmb claSS (rmb) 0.9805 1.0027 - uSd claSS (rmb) 6 6.6483 6.6689

NaV Per uNit iN reSPectiVe curreNcieS- rmb claSS (rmb) 0.9805 1.0027 - uSd claSS (uSd) 6 1.0000 1.0000



4.3 StatemeNt Of chaNGeS iN Net aSSet Value fOr the fiNaNcial PeriOd frOm 1 JaNuary 2017 tO 30 SePtember 2017

(unaudited)

Noteunit holders’ contribution

(accumulated loss)

/retained earning total NaV

rmb rmb rmb

1.1.2017 to 30.9.2017At beginning of the financial

period 1,590,022 10,782 1,600,804Total comprehensive loss - (42,488) (42,488)Cancellation of units

- RMB CLASS 5(a) (99,138) - (99,138)- USD CLASS 5(b) - - -

Distribution equalisation- RMB CLASS 5(a) 565 - 565- USD CLASS 5(b) - - -

At end of the financial period 1,491,449 (31,706) 1,459,743

1.10.2015 (date of commencement) to 30.9.2016

At date of commencement - - -Total comprehensive income - 1,069 1,069Creation of units

- RMB CLASS 5(a) 2,329,733 - 2,329,733- USD CLASS 5(b) - - -

Distribution equalisation- RMB CLASS 5(a) 5,183 - 5,183- USD CLASS 5(b) - - -

At end of the financial period 2,334,916 1,069 2,335,985



4.4 StatemeNt Of caSh flOWS fOr the fiNaNcial PeriOd frOm 1 JaNuary 2017 tO 30 SePtember 2017

(unaudited)

1.1.2017 to 30.9.2017

1.10.2015 (date of

commencement) to 30.9.2016

rmb rmb

caSh flOWS frOm OPeratiNG aNd iNVeStiNG actiVitieS

Proceeds from sale of financial assets at FVTPL 99,906 -Interest from deposits received - 3,824 Purchase of financial assets at FVTPL - (2,242,000)Trustee’s fee paid (569) (576)Payment for other fees and expenses (1,054) (806)Manager’s fee paid (5,571) (17,875)Net cash generated from/(used in) operating and

investing activities 92,712 (2,257,433)

caSh flOWS frOm fiNaNciNG actiVitieS

Cash received from units created - 2,334,916 Cash paid on units cancelled (98,573) -Net cash (used in)/generated from financing activities (98,573) 2,334,916

Net (decreaSe)/iNcreaSe iN caSh aNd caSh eQuiValeNtS (5,861) 77,483

caSh aNd caSh eQuiValeNtS at beGiNNiNG Of the fiNaNcial PeriOd/date Of cOmmeNcemeNt 66,976 -

caSh aNd caSh eQuiValeNtS at eNd Of the fiNaNcial PeriOd 61,115 77,483

Cash and cash equivalents comprise:Cash at bank 61,115 77,483



4.5 NOteS tO the fiNaNcial StatemeNtS fOr the fiNaNcial PeriOd frOm 1 JaNuary 2017 tO 30 SePtember 2017

(unaudited)

1. the fuNd, the maNaGer aNd their PriNciPal actiVitieS

Kenanga-ICBC China Focus Income Fund (“the Fund”) was constituted pursuant to the executed Deed dated 24 June 2015 between the Manager, Kenanga Investors Berhad, and CIMB Commerce Trustee Berhad (“the Trustee”). The Fund commenced operations on 1 October 2015 and will continue to be in operation until terminated as provided under Part 11 of the Deed.

Kenanga Investors Berhad is a wholly-owned subsidiary of Kenanga Investment Bank Berhad. Prior to 1 November 2016, Kenanga Investment Bank Berhad was a wholly-owned subsidiary of K & N Kenanga Holdings Berhad that was listed on the Main Market of Bursa Malaysia Securities Berhad. Pursuant to an internal reorganisation exercise completed on 1 November 2016, Kenanga Investment Bank Berhad has become the holding company of K & N Kenanga Holdings Berhad. On 2 November 2016, Kenanga Investment Bank Berhad has assumed the listing status of K & N Kenanga Holdings 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 unit holders long term capital growth by investing in the Target Fund. To achieve the objective of the Fund, it will invest a minimum 95% of the Fund’s NAV in Share class A of the ICBC China Focus Stable Return Fund (“Target Fund”), a fund which is managed by RBS (Luxembourg) S.A. (“AIFM”), and domiciled in Luxembourg. The remaining of the Fund’s NAV will be invested in liquid assets comprising money market instruments and deposits with licensed financial institutions.

2. fiNaNcial aSSetS at fVtPl

30.9.2017 30.9.2016 rmb rmb

Financial assets held for trading, at FVTPL:Collective investment scheme - foreign 1,399,940 2,249,313

1.1.2017 to 30.9.2017

1.10.2015 (date of

commencement) to 30.9.2016

rmb rmbNet (loss)/gain on financial assets at FVTPL

comprised:Realised loss on disposals (66) -Unrealised changes in fair values (28,954) 7,313

(29,020) 7,313


2. fiNaNcial aSSetS at fVtPl (cONtd.)

Details of financial assets at FVTPL as at 30 September 2017:

Quantity cost fair valuePercentage

of NaVrmb rmb %

collective investment scheme - foreign

ICBC China Focus Stable Return Fund 204.681 1,411,198 1,399,940 95.9

total collective investment scheme – foreign, representing total financial assets at fVtPl 1,411,198 1,399,940 95.9

unrealised loss on financial assets at fVtPl (11,258)

3. 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 12.1 of the Deed.

The Manager is currently charging Manager’s fee of 1.50% per annum of the NAV of the Fund (financial period from 1 October 2015 (date of commencement) to 30 September 2016: 1.50%).

As the Fund invests in unit of Target Fund, 1.00% of the Manager’s fee is charged by the Target Fund’s manager and the remaining 0.50% is charged by the Manager. Accordingly, there is no double charging of Manager’s fee.

4. truStee’S fee, auditOrS’ remuNeratiON, taX aGeNt’S fee aNd Other admiNiStratiON eXPeNSeS

The Trustee’s fee is calculated on a daily basis at a rate not exceeding 0.05% per annum of the NAV of the Fund as provided under Division 12.2 of the Deed.

The Trustee’s fee is currently calculated at 0.05% per annum of the NAV of the Fund (financial period from 1 October 2015 (date of commencement) to 30 September 2016: 0.05%). The auditors’ remuneration, tax agent’s fee and other administration expenses were absorbed by the Manager for the current and previous financial periods.


5. Net aSSet Value attributable tO uNit hOlderS

NAV attributed to unit holders is represented by:

Note 30.9.2017 30.9.2016rmb rmb

Unit holders’ contribution- RMB CLASS (a) 1,491,449 2,334,916

(Accumulated loss)/Retained earning:Realised reserves (20,448) (6,244)Unrealised reserves (11,258) 7,313

(31,706) 1,069

1,459,743 2,335,985

(a) unitholders’ contribution – rmb claSS

1.1.2017 to 30.9.2017

1.10.2015 (date of commencement) to

30.9.2016No. of units rmb No. of units rmb

At beginning of the financial period/date of commencement 1,587,880 1,590,022 - -

Add: Creation of units - - 2,329,733 2,329,733

Less: Cancellation of units (99,138) (99,138) - -

Distribution equalisation - 565 - 5,183

At end of the financial period 1,488,742 1,491,449 2,329,733 2,334,916

(b) unitholders’ contribution – uSd claSS

1.1.2017 to 30.9.2017

1.10.2015 (date of commencement) to

30.9.2016No. of units rmb No. of units rmb

At date of commencement/ end of the financial period - - - -


5. Net aSSet Value attributable tO uNit hOlderS (cONtd.)

The number of units legally or beneficially held by the Manager, Kenanga Investors Berhad, and parties related to the Manager as at 30 September 2017 were nil (30 September 2016: nil).

6. Net aSSet Value Per uNit

The NAV per unit of the Fund, Class USD presented in the statement of financial position represents the initial offer price at the launch of the Fund and translated into presentation currency of the Fund based on the prevailing exchange rate at reporting date.

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investor Services centerToll Free Line: 1 800 88 3737Fax: +603 2172 3133Email: [email protected]

Head Office, Kuala LumpurLevel 14, Kenanga Tower, 237 Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia.Tel: 03-2172 3000 Fax: 03-2172 3080

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KeNaNGa - icbc chiNa fOcuS iNcOme fuNd · E-mail:[email protected] Website: ... Level 13, Menara CIMB Jalan Stesen Sentral 2 Kuala Lumpur Sentral 50490 Kuala Lumpur