KENANGA INCOME PLUS FUND...Jalan Stesen Sentral 2 Kuala Lumpur Sentral 50490 Kuala Lumpur. Tel: 03-2261 8888 Fax: 03-2261 0099 Website: Business Office Level 21, Menara CIMB Jalan

ANNUAL REPORT

For the Financial Year Ended 31 March 2016

KENANGA INCOMEPLUS FUND

KENANGA INCOME PLUS FUND Contents Page Corporate Directory ii Directory of Manager’s Offices iii Fund Information 1 Manager’s Report 2-6 Fund Performance 7-9 Trustee’s Report 10 Independent Auditor’s Report 11-12 Statement by the Manager 13 Financial Statement 14-39

ii Kenanga Income Plus Fund Annual Report

Kenanga Income Plus Fund Annual Report ii

CORPORATE DIRECTORY Manager: Kenanga Investors Berhad (Company No. 353563-P) Registered Office Kenanga Investors Berhad (KIB) 8th Floor, Kenanga International, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia. Tel: 03-2162 1490 Fax: 03-2161 4990

Business Office Suite 12.02, 12th Floor, Kenanga International, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia. Tel: 03-2057 3688 Fax: 03-2161 8807 E-mail:[email protected] Website: www.KenangaInvestors.com.my

Board Of Directors Datuk 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 Huat Ismitz 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) 9th Floor, Kenanga International, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia. Tel: 03-2162 1490 Fax:03-2161 4990

Trustee: CIMB Commerce Trustee Berhad (Company No. 313031-A) Registered Office Level 13, Menara CIMB Jalan Stesen Sentral 2 Kuala Lumpur Sentral 50490 Kuala Lumpur. Tel: 03-2261 8888 Fax: 03-2261 0099 Website: www.cimb.com

Business Office Level 21, Menara CIMB Jalan Stesen Sentral 2 Kuala Lumpur Sentral 50490 Kuala Lumpur. Tel: 03-2261 8888 Fax: 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 Income Plus Fund Annual Report iii

DIRECTORY OF MANAGER’S OFFICES Regional Branch Offices :

Kuala Lumpur Suite 12.02, 12th Floor, Kenanga International Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia Tel: 03-2057 3688 Fax: 03-2161 8807

Johor Bahru Lot 11.03, 11th Floor, Menara MSC Cyberport 5, Jalan Bukit Meldrum 80300 Johor Bahru , Johor Tel: 07-223 7505 / 4798 Fax: 07-223 4802

Melaka No. 25-1, Jalan Kota Laksamana 2/17 Taman Kota Laksamana, Seksyen 2 75200 Melaka Tel: 06-281 8913 Fax: 06-281 4286

Kuching 1st Floor, No 71, Lot 7 Lot 10900, Jalan Tun Jugah 93350 Kuching, Sarawak Tel: 082-572 228 Fax: 082-572 229

Klang No. 12, Jalan Batai Laut 3, Taman Intan 41300 Klang, Selangor Darul Ehsan Tel: 03-3341 8818 / 03-3348 7889 Fax: 03-3341 8816

Kota Kinabalu A-03-11, 3rd Floor Block A, Warisan Square Jalan Tun Fuad Stephens 88000 Kota Kinabalu, Sabah Tel: 088-447 089 / 088-448 106 Fax: 088-447 039

Penang 16th Floor, Menara Boustead Penang 39, Jalan Sultan Ahmad Shah 10050 Penang. Tel : 04-227 3788 / 04-210 6644 Fax : 04-226 5120

Ipoh Suite 1, 2nd Floor, 63, Persiaran Greenhill, 30450 Ipoh, Perak, Malaysia Tel: 05-254 7573 / 7570 Fax: 05-254 7606

Seremban 2nd Floor, No. 1D-2, Jalan Tuanku Munawir 70000 Seremban, Negeri Sembilan Tel : 06-761 5678 Fax : 06-761 2243

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


Kenanga Income Plus Fund Annual Report ii

CORPORATE DIRECTORY Manager: Kenanga Investors Berhad (Company No. 353563-P) Registered Office Kenanga Investors Berhad (KIB) 8th Floor, Kenanga International, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia. Tel: 03-2162 1490 Fax: 03-2161 4990

Business Office Suite 12.02, 12th Floor, Kenanga International, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia. Tel: 03-2057 3688 Fax: 03-2161 8807 E-mail:[email protected] Website: www.KenangaInvestors.com.my

Board Of Directors Datuk 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 Huat Ismitz 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) 9th Floor, Kenanga International, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia. Tel: 03-2162 1490 Fax:03-2161 4990

Trustee: CIMB Commerce Trustee Berhad (Company No. 313031-A) Registered Office Level 13, Menara CIMB Jalan Stesen Sentral 2 Kuala Lumpur Sentral 50490 Kuala Lumpur. Tel: 03-2261 8888 Fax: 03-2261 0099 Website: www.cimb.com

Business Office Level 21, Menara CIMB Jalan Stesen Sentral 2 Kuala Lumpur Sentral 50490 Kuala Lumpur. Tel: 03-2261 8888 Fax: 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


DIRECTORY OF MANAGER’S OFFICES Regional Branch Offices :

Kuala Lumpur Suite 12.02, 12th Floor, Kenanga International Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia Tel: 03-2057 3688 Fax: 03-2161 8807

Johor Bahru Lot 11.03, 11th Floor, Menara MSC Cyberport 5, Jalan Bukit Meldrum 80300 Johor Bahru , Johor Tel: 07-223 7505 / 4798 Fax: 07-223 4802

Melaka No. 25-1, Jalan Kota Laksamana 2/17 Taman Kota Laksamana, Seksyen 2 75200 Melaka Tel: 06-281 8913 Fax: 06-281 4286

Kuching 1st Floor, No 71, Lot 7 Lot 10900, Jalan Tun Jugah 93350 Kuching, Sarawak Tel: 082-572 228 Fax: 082-572 229

Klang No. 12, Jalan Batai Laut 3, Taman Intan 41300 Klang, Selangor Darul Ehsan Tel: 03-3341 8818 / 03-3348 7889 Fax: 03-3341 8816

Kota Kinabalu A-03-11, 3rd Floor Block A, Warisan Square Jalan Tun Fuad Stephens 88000 Kota Kinabalu, Sabah Tel: 088-447 089 / 088-448 106 Fax: 088-447 039

Penang 16th Floor, Menara Boustead Penang 39, Jalan Sultan Ahmad Shah 10050 Penang. Tel : 04-227 3788 / 04-210 6644 Fax : 04-226 5120

Ipoh Suite 1, 2nd Floor, 63, Persiaran Greenhill, 30450 Ipoh, Perak, Malaysia Tel: 05-254 7573 / 7570 Fax: 05-254 7606

Seremban 2nd Floor, No. 1D-2, Jalan Tuanku Munawir 70000 Seremban, Negeri Sembilan Tel : 06-761 5678 Fax : 06-761 2243

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

1 Kenanga Income Plus Fund Annual Report Kenanga Income Plus Fund Annual Report 1

1. FUND INFORMATION 1.1 Fund Name

Kenanga Income Plus Fund (KIPF or the Fund) 1.2 Fund Category / Type

Bond / Income

1.3 Investment Objective The Fund aims to provide investors with a regular income stream through investments in bonds and money market instruments.

1.4 Investment Strategy The Fund invests in securities that have a minimum rating of “investment grade” i.e. rated at least BBB3 by RAM or equivalent rating by MARC or other rating agencies.

1.5 Duration The Fund was launched on 23 April 2004 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.

1.6 Performance Benchmark All Malaysian Government Securities (MGS) Index obtainable from www.quantshop.com

1.7 Distribution Policy Income (if any) will be distributed twice a year on a best effort basis.

1.8 Breakdown of unit holdings of KIPF as at 31 March 2016

Size of holdings No. of unitholders No. of units held 5,000 and below 212 440,876 5,001 - 10,000 78 586,523 10,001-50,000 190 4,711,912 50,001-500,000 75 8,797,299 500,001 and above 6 4,343,543 Total 561 18,880,153

Kenanga Income Plus Fund Annual Report 2

2. MANAGER’S REPORT 2.1 Explanation on whether the Fund has achieved its investment objective.

For the financial year under review, the Fund has achieved its investment objective of aiming to provide investors with a regular income stream through investments in bonds and money market instruments.

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

Performance Chart Since Launch (23/04/2004– 31/03/2016) Kenanga Income Plus Fund vs All Malaysian Government Securities Index

Source: Novagni Analytics and Advisory Sdn Bhd

2.3 Investment strategies and policies employed during the financial year under

review During the financial year under review, the Fund’s strategy is based on the belief that fundamental economic and sector analysis drives long-term outperformance, and that active management of credit risk can produce consistently superior results than those produced through passive management. The investment process begins with thorough macro-economic analysis. The analysis is used to position the portfolio with respect to duration, convexity and yield curve shape. The Fund adds value through the application of credit skills and interest rates anticipation, shifting duration, sector and credit exposures in the context of the expected economic and financial environment. On a bottom-up perspective, the Fund focuses on seeking adequate reward for any credit risks assumed. Here, the Fund may take advantage of sector rotation, issue selection and relative value positioning. The Fund emphasizes medium to long-term investment views and involves the application of relative value analysis to individual credits and industry sectors.

Kenanga Income Plus Fund Annual Report 2Kenanga Income Plus Fund Annual Report 1

1. FUND INFORMATION 1.1 Fund Name

Kenanga Income Plus Fund (KIPF or the Fund) 1.2 Fund Category / Type

Bond / Income

1.3 Investment Objective The Fund aims to provide investors with a regular income stream through investments in bonds and money market instruments.

1.4 Investment Strategy The Fund invests in securities that have a minimum rating of “investment grade” i.e. rated at least BBB3 by RAM or equivalent rating by MARC or other rating agencies.

1.5 Duration The Fund was launched on 23 April 2004 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.

1.6 Performance Benchmark All Malaysian Government Securities (MGS) Index obtainable from www.quantshop.com

1.7 Distribution Policy Income (if any) will be distributed twice a year on a best effort basis.

1.8 Breakdown of unit holdings of KIPF as at 31 March 2016

Size of holdings No. of unitholders No. of units held 5,000 and below 212 440,876 5,001 - 10,000 78 586,523 10,001-50,000 190 4,711,912 50,001-500,000 75 8,797,299 500,001 and above 6 4,343,543 Total 561 18,880,153


2. MANAGER’S REPORT 2.1 Explanation on whether the Fund has achieved its investment objective.

For the financial year under review, the Fund has achieved its investment objective of aiming to provide investors with a regular income stream through investments in bonds and money market instruments.

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

Performance Chart Since Launch (23/04/2004– 31/03/2016) Kenanga Income Plus Fund vs All Malaysian Government Securities Index

Source: Novagni Analytics and Advisory Sdn Bhd


review During the financial year under review, the Fund’s strategy is based on the belief that fundamental economic and sector analysis drives long-term outperformance, and that active management of credit risk can produce consistently superior results than those produced through passive management. The investment process begins with thorough macro-economic analysis. The analysis is used to position the portfolio with respect to duration, convexity and yield curve shape. The Fund adds value through the application of credit skills and interest rates anticipation, shifting duration, sector and credit exposures in the context of the expected economic and financial environment. On a bottom-up perspective, the Fund focuses on seeking adequate reward for any credit risks assumed. Here, the Fund may take advantage of sector rotation, issue selection and relative value positioning. The Fund emphasizes medium to long-term investment views and involves the application of relative value analysis to individual credits and industry sectors.



review (Contd.) The Fund invests in securities that have a minimum rating of “investment grade” i.e. rated at least BBB3 by RAM or equivalent rating my MARC or other rating agencies. In responding to adverse market conditions, economic, political or any other conditions, the portfolio manager will take positions and invest in assets that are consistent with the Fund’s objective. The Fund employs strategies such as overall portfolio duration and yield curve positioning to deal with market and reinvestment risks. Bond strategies employed can translate into a laddered, barbell or bullet portfolios. For investments in credits, a top-down allocation of corporate issuers in the portfolio and the selection of best-priced securities within a given credit rating can improve the performance of a credit portfolio. The Fund’s internal controls include asset allocation strategies to limit exposures in a single asset class. The Fund also imposes single-issuer limits to restrict over-investments in a single or group of companies i.e. issuer risks. Portfolio turnover and dealing limits control churning and over-trading with securities trade-counter parties. Functionally, investment management is separated from the trade processing and compliance units so that investment limits can be independently monitored and reported. In adverse market conditions, the Fund will remain true-to-label and within the mandate and asset allocation ranges.

2.4 The Fund's asset allocation as at 31 March 2016 and comparison with the previous financial year Asset 31 Mar 2016 31 Mar 2015 Unquoted corporate bonds 80.20% 93.10% Unquoted government guaranteed bonds 11.20% 3.70% Short term deposits and cash 8.60% 3.20%

Reason for the differences in asset allocation As at financial year ended 31 March 2016, the Fund was 91.40% invested in bonds, of which 80.20% were corporate bonds while 11.20% were government guaranteed bonds. This was lower compared to the previous financial year end as cash level was raised in anticipation of an upcoming higher-yielding primary issuance which will provide yield enhancement to the portfolio.


2.5 Fund performance analysis based on NAV per unit (adjusted for income distribution) since last review period Period under review Kenanga Income Plus Fund 3.07% All Malaysian Government Securities Index 4.34%

Source: Lipper and Novagni Analytics and Advisory Sdn Bhd During the financial year under review, the Fund registered a return of 3.07% against its benchmark’s return of 4.34%, an underperformance of 127 bps. The Fund’s underperformance was mainly due to the widening of corporate bond spreads despite positive movement seen in government bond space reflecting that the net selling pressure was mainly driven by anticipation in upcoming primary deals, paired with cautious sentiment heading into December Fed meeting.

2.6 Review of the market

Fixed Income Market Review Markets were grappling with timing of first Fed hiking cycle, slowing Chinese growth and renewed plunge in commodity prices. The spectre of Fed normalization loomed even as the markets were heavily discounting timing of hikes and this kept 10-year US Treasury (UST) yields firmly at the bottom half of its 2.0-2.5% trading range for most part of 2015. Market has been forced to contend with a curveball from People’s Bank of China (PBoC0 as well. Concerns on the Chinese economy were unavoidable with early sign of warning on the back of one-off Chinese Yuan (CNY)’s devaluation that stoked fears of competitive devaluation. In Asia, implied short-term rates were generally higher. The performance of Asian government bonds have been mixed given the nature of being commodity or trade-dependent. Commodity producers such as Malaysia performed poorly while China, Korea and Taiwan government bonds performed well with disappointing macro sentiments. Malaysian sovereign bonds recovered partial losses posted towards year-end demand with net buying interest from offshore players and temporary spike in crude oil prices. Yield curve ended steeper as gains were skewed towards the front end of the curve. Significant increase in risk aversion in early 1Q2016 was the major force pushing global rates lower with about 70% of sovereign bond yields at 2.0% or less. Negative interest rate policies (NIRP) along with wavering US Dollar strength bode well for emerging market Asia fixed income. Many Asian central banks also took the opportunity to ease policies in turn providing additional support to sovereign bonds. Malaysia bonds stood out to benefit most from currency stability, prospects of further monetary easing and bounce in commodity prices. As Malaysia’s 5-year credit default swap (CDS) eased further, yields came off from very elevated levels by up to 41 basis points since December 2015, bringing 3-year and 10-year MGS yields to 3.21% and 3.78%. Most buying interests were slanted towards long-end and bellies of the curve.


2.6 Review of the market (Contd.)

Fixed Income Market Outlook Into the second quarter of the year, key watch is US inflation, which is now stepping north as it quietly passed the Fed’s 2.0% target back in November 2015. As long as the European Central Bank (ECB) and the Bank of Japan (BoJ) continue with quantitative easing of which a sizeable portion now offers negative yields, it will continue to drive capital into higher yielding and longer duration. Asian papers will continue to be in demand supported by positive real interest rates and relative underweight position by most fund managers and accommodative monetary policy. Key risk to this view is return of inflation, further unexpected depreciation of Renminbi (RMB) and impact from deposit slowdown over tighter credit supply. Ringgit Malaysia debt papers will be supported by high degree of stickiness of foreign holding, which are mostly owned by central bank/government and pension funds. Valuation wise, the currency still have some leeway to appreciate and supported by expectations of further monetary easing. We are mindful of reversal in bearish US Dollar positioning and risk of front-end loading demand should Overnight Policy Rate (OPR) and Statutory Reserve Rate (SRR) rates cut expectation tapers off. Negative bias condition for credit papers is likely to continue based on rating actions, profitability pressure and shrinking unencumbered loan receivables, which could exert upward pressure on credit spread.


2.7 Income Distribution

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 affair of the Fund during the financial year

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

2.10 Circumstances that materially affect any interests of the unitholders

During the financial year under review, there were no circumstances that materially affected any interests of the unitholders.

2.11 Rebates & Soft commissions

Any rebates received are channeled back to the Fund. On the other hand, soft commissions received from the stockbrokers for goods and services such as technical analysis software, fundamental database, financial wire services, stock quotation system and portfolio management software incidental to investment management of the Fund shall be retained by the Manager. For the financial year under review, the Manager did not receive any rebates or soft commissions from stockbrokers.


3. FUND PERFORMANCE 3.1 Details of portfolio composition of Kenanga Income Plus Fund (“the Fund”) for

the last three financial years as at 31 March are as follow:

a. Distribution among industry sectors and category of investments:

FY FY FY 2016 2015 2014 % % %

Unquoted corporate bonds 80.2 93.1 82.1 Unquoted government guaranteed bonds 11.2 3.7 6.8 Short term deposits and cash 8.6 3.2 11.1 100.0 100.0 100.0

Note: The above mentioned percentages are based on total investment market

value plus cash. b. Distribution among markets

The Fund invested in fixed income securities and cash instruments only.


3.2 Performance details of the Fund for the last three financial years ended 31 March

are as follows:

FY FY FY 2016 2015 2014

Net asset value ("NAV") (RM Million) 13.95 19.28 30.66 Units in circulation (Million) 18.88 26.91 44.41 NAV per unit (RM) 0.7387 0.7167 0.6905 Highest NAV per unit (RM) 0.7394 0.7167 0.6947 Lowest NAV per unit (RM) 0.7169 0.6906 0.6846 Total return (%) 3.07 3.79 0.70 - Capital growth (%) 3.07 3.79 0.70 - Income growth (%) - - - Gross distribution per unit (sen) - - - Net distribution per unit (sen) - - - Management expense ratio (“MER”) (%) 1 1.23 1.16 1.15 Portfolio turnover ratio (“PTR”) (times) 2 1.20 0.89 0.90

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 s 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 higher against previous financial years mainly due to decrease in

average fund size during the financial year under review. 2. PTR was higher during the financial year under review compared to previous

financial year due to higher trading activities during the year. * Based on bid price fair valuation method on all investments held by the Fund as

at 31 March 2016, the NAV and NAV per unit would be RM13.95 million and RM0.7390 respectively. (As disclosed under Note 12 of the financial statements)


3.3 Average total return of the Fund

1 Year 3 Years 5 Years 31 Mar 15 -

31 Mar 16 31 Mar 13 - 31 Mar 16

31 Mar 11 - 31 Mar 16

Kenanga Income Plus Fund 3.07% 2.48% 3.52% All Malaysian Government Securities Index 4.34% 3.57% 4.31%

Source: Lipper 3.4 Annual total return of the Fund

Period under review 1 Year 1 Year 1 Year 1 Year

31 Mar 15 –31 Mar 16

31 Mar 14 –31 Mar 15

31 Mar 13 - 31 Mar 14

31 Mar 12 - 31 Mar 13

31 Mar 11 - 31 Mar 12

Kenanga Income Plus Fund 3.07% 3.79% 0.70% 3.60% 5.31%

All Malaysian Government Securities Index

4.34% 5.27% 0.87% 4.59% 5.22%

Source: Lipper

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 UNITHOLDERS OF KENANGA INCOME PLUS FUND

We, CIMB COMMERCE TRUSTEE BERHAD (“the Trustee”), being the Trustee of KENANGA INCOME PLUS FUND (“the Fund”) are of the opinion that KENANGA INVESTORS BERHAD (“the Manager”), acting in the capacity of Manager of the Fund, has fulfilled its duties in the following manner for the financial year ended 31 March 2016.

a) The Fund has been managed in accordance with the limitations imposed on the

investment powers of the Manager and the Trustee 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/pricing of units of 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 (313031-A) LEE KOOI YOKE Chief Operating Officer Kuala Lumpur, Malaysia 23 May 2016


5. INDEPENDENT AUDITORS’ REPORT

TO THE UNITHOLDERS OF KENANGA INCOME PLUS FUND Report on the financial statements We have audited the financial statements of Kenanga Income Plus Fund (“the Fund”), which comprise the statement of financial position as at 31 March 2016 and the statement of comprehensive income, statement of changes in net asset value and statement of cash flows for the financial year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 14 to 39.

Manager’s and Trustee’s responsibility for the financial statements and fair presentation

The Manager of the Fund is responsible for the preparation of financial statements so as to 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 that are free from material misstatement, whether due to fraud or error. The Trustee is 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’ responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Fund’s preparation of financial statements that give a true and fair view 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. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by the Manager, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.



TO THE UNITHOLDERS OF KENANGA INCOME PLUS FUND (CONTD.)

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the Fund as at 31 March 2016 and of its financial performance, changes in net asset value and cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards. Other matters

This report is made solely to the unitholders of the Fund, as a body, and for no other purpose. We do not assume responsibility to any other person for the content of this report.

Ernst & Young Chan Hooi Lam AF: 0039 No. 2844/02/18(J) Chartered Accountants Chartered Accountant

Kuala Lumpur, Malaysia 23 May 2016



TO THE UNITHOLDERS OF KENANGA INCOME PLUS FUND Report on the financial statements We have audited the financial statements of Kenanga Income Plus Fund (“the Fund”), which comprise the statement of financial position as at 31 March 2016 and the statement of comprehensive income, statement of changes in net asset value and statement of cash flows for the financial year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 14 to 39.

Manager’s and Trustee’s responsibility for the financial statements and fair presentation

The Manager of the Fund is responsible for the preparation of financial statements so as to 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 that are free from material misstatement, whether due to fraud or error. The Trustee is 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’ responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Fund’s preparation of financial statements that give a true and fair view 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. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by the Manager, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.



TO THE UNITHOLDERS OF KENANGA INCOME PLUS FUND (CONTD.)

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the Fund as at 31 March 2016 and of its financial performance, changes in net asset value and cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards. Other matters

This report is made solely to the unitholders of the Fund, as a body, and for no other purpose. We do not assume responsibility to any other person for the content of this report.

Ernst & Young Chan Hooi Lam AF: 0039 No. 2844/02/18(J) Chartered Accountants Chartered Accountant



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 31 March 2016 and the related statement of comprehensive income, statement of changes in net asset value and statement of cash flows for the financial year ended 31 March 2016 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 Income Plus Fund as at 31 March 2016 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 Alwis Director



7. FINANCIAL STATEMENT 7.1 STATEMENT OF COMPREHENSIVE INCOME

FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

Note 2016 2015 RM RM INVESTMENT INCOME Interest income 732,387 1,049,711 Net (loss)/gain from investments:

- Financial assets at fair value through profit or loss (“FVTPL”) 4 (45,839) 115,665

686,548 1,165,376 EXPENSES Manager’s fee 5 159,725 232,639 Trustee’s fee 6 11,180 16,325 Auditors’ remuneration 8,500 11,000 Tax agent’s fee 3,600 3,550 Administration expenses 12,547 8,571 195,552 272,085 NET INCOME BEFORE TAX 490,996 893,291 Income tax 7 - - NET INCOME AFTER TAX, REPRESENTING

TOTAL COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR 490,996 893,291

Net income after tax is made up as follows:

Realised gain 478,724 290,898 Unrealised gain 4 12,272 602,393

490,996 893,291

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


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 31 March 2016 and the related statement of comprehensive income, statement of changes in net asset value and statement of cash flows for the financial year ended 31 March 2016 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 Income Plus Fund as at 31 March 2016 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 Alwis Director



7. FINANCIAL STATEMENT 7.1 STATEMENT OF COMPREHENSIVE INCOME

FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

Note 2016 2015 RM RM INVESTMENT INCOME Interest income 732,387 1,049,711 Net (loss)/gain from investments:

- Financial assets at fair value through profit or loss (“FVTPL”) 4 (45,839) 115,665

686,548 1,165,376 EXPENSES Manager’s fee 5 159,725 232,639 Trustee’s fee 6 11,180 16,325 Auditors’ remuneration 8,500 11,000 Tax agent’s fee 3,600 3,550 Administration expenses 12,547 8,571 195,552 272,085 NET INCOME BEFORE TAX 490,996 893,291 Income tax 7 - - NET INCOME AFTER TAX, REPRESENTING

TOTAL COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR 490,996 893,291

Net income after tax is made up as follows:

Realised gain 478,724 290,898 Unrealised gain 4 12,272 602,393

490,996 893,291



7.2 STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2016


Note 2016 2015 RM RM INVESTMENTS Financial assets at FVTPL 4 12,800,428 18,379,041 Short term deposits 8 1,192,459 590,253 13,992,887 18,969,294 OTHER ASSETS Amount due from Manager - 360,503 Other receivable 9 108 52 Cash at bank 10,028 15,436 10,136 375,991 TOTAL ASSETS 14,003,023 19,345,285 LIABILITIES Amount due to Manager 27,966 - Amount due to Trustee 805 1,175 Other payables 10 21,238 37,000 TOTAL LIABILITIES 50,009 38,175 EQUITY Unitholder’s contribution 9,658,939 4,979,467 Retained earnings 4,294,075 14,327,643 NET ASSET VALUE ("NAV") ATTRIBUTABLE

TO UNITHOLDERS 11 13,953,014 19,307,110 TOTAL EQUITY AND LIABILITIES 14,003,023 19,345,285 NUMBER OF UNITS IN CIRCULATION 11(a) 18,880,153 26,906,116 NET ASSET VALUE PER UNIT (RM) 12 0.7390 0.7176


7.3 STATEMENT OF CHANGES IN NET ASSET VALUE FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

Note Unitholders’ contribution

Retained earnings

Total NAV

RM RM RM 2016 At beginning of the financial year 4,979,467 14,327,643 19,307,110

Total comprehensive income - 490,996 490,996 Creation of units 11(a) 20,280,046 - 20,280,046 Cancellation of units 11(a) (26,060,192) - (26,060,192) Distribution equalisation 11(a) (64,946) - (64,946) Reclassification from retained earnings 11(a) 10,524,564 (10,524,564) -

At end of the financial year 9,658,939 4,294,075 13,953,014 2015 At beginning of the financial year 17,257,103 13,434,352 30,691,455

Total comprehensive income - 893,291 893,291 Creation of units 11(a) 23,869,367 - 23,869,367 Cancellation of units 11(a) (36,122,026) - (36,122,026) Distribution equalisation 11(a) (24,977) - (24,977) At end of the financial year 4,979,467 14,327,643 19,307,110



7.4 STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

2016 2015 RM RM CASH FLOWS FROM OPERATING AND

INVESTING ACTIVITIES Proceeds from sale of financial assets at FVTPL 21,891,688 25,584,905 Interest received 818,811 1,199,198 Tax agent’s fee paid (3,500) (3,650) Auditors’ remuneration paid (8,500) (8,500) Trustee's fee paid (11,550) (17,070) Manager's fee paid (165,014) (243,284) Payment for other fees and expenses (28,409) (16,971) Purchase of financial assets at FVTPL (16,445,395) (15,895,860) Net cash generated from operating and investing activities 6,048,131 10,598,768

CASH FLOWS FROM FINANCING ACTIVITIES

Cash received from units created 20,827,729 23,544,458 Cash paid on units cancelled (26,279,062) (37,044,085) Net cash used in financing activities (5,451,333) (13,499,627) NET INCREASE/(DECREASE) IN CASH AND

CASH EQUIVALENTS 596,798 (2,900,859) CASH AND CASH EQUIVALENTS AT BEGINNING

OF THE FINANCIAL YEAR 605,689 3,506,548 CASH AND CASH EQUIVALENTS AT END OF

THE FINANCIAL YEAR 1,202,487 605,689 Cash and cash equivalents comprise:

Cash at bank 10,028 15,436 Short term deposits 1,192,459 590,253

1,202,487 605,689



7.5 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

1. THE FUND, THE MANAGER AND THEIR PRINCIPAL ACTIVITIES

Kenanga Income Plus Fund ("the Fund") was constituted pursuant to the executed Master Deed dated 16 April 2004 (collectively, together with deeds supplemental thereto, referred to as "the Deed") between the Manager, Kenanga Funds Berhad, and CIMB Commerce Trustee Berhad ("the Trustee"). The Fund commenced operations on 23 April 2004 and will continue to be in operation until terminated by the Trustee as provided under Clause 38 of the Deed. Pursuant to the executed Seventh Supplemental Deed dated 15 May 2013 between Kenanga Investors Berhad and CIMB Commerce Trustee Berhad, Kenanga Investors Berhad was appointed as the Manager of the Fund with effect from 8 June 2013. Kenanga Investors Berhad is a wholly-owned subsidiary of Kenanga Investment Bank Berhad, which in turn is a wholly-owned subsidiary of K & N Kenanga Holdings 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 Suite 12.02, 12th Floor, Kenanga International, Jalan Sultan Ismail, 50250 Kuala Lumpur. The Fund seeks to provide investors with a regular income through investments in bonds and money market instruments stability. The Fund’s strategy is based on the belief that fundamental economic and sector analysis drives long term outperformance, and that active management of credit risk can produce consistently superior results than those produced through passive management. The financial statements were authorised for issue by the Chief Executive Officer of the Manager on 23 May 2016.

2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The Fund is exposed to a variety of risks including market risk (which includes interest rate 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 unitholders, consistent with the long term objectives of the Fund.


2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD.)

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. 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 investment’s price caused by uncertainties in the economic, political and social environment will affect the NAV of the Fund. 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 valuation of the Fund’s investments. Rates 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 unquoted corporate bonds, unquoted government guaranteed bonds and deposits. The Fund’s exposure to the interest rate risk is mainly confined to unquoted corporate bonds and unquoted government guaranteed bonds. Interest rate risk sensitivity

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

Changes in rate Increase/(decrease)

Effect on profit for the financial year Increase/(decrease)

Basis points RM 2016 Financial assets at FVTPL 5/(5) (24,198)/24,266

2015 Financial assets at FVTPL 5/(5) (25,164)/25,227

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


2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) a. Market Risk (Contd.)

i. Interest rate risk (Contd.)

Interest rate risk exposure The following table analyses the Fund’s interest rate risk exposure. The Fund’s assets and liabilities are disclosed at fair value and categorised by the earlier of contractual re-pricing or maturity dates.

Up to 1 year

Above 1 year – 5

years

Above 5 years – 15

years

Non-exposure to interest rate

movement Total

Weighted average effective interest

rate* RM RM RM RM RM %

2016 Assets Financial

assets at FVTPL - 7,330,424 5,326,869 143,135 12,800,428 5.01

Short term deposits 1,192,459 - - - 1,192,459 3.30

Other assets - - - 10,136 10,136 1,192,459 7,330,424 5,326,869 153,271 14,003,023 Liabilities Other

liabilities - - - 50,009 50,009 Total interest

sensitivity gap 1,192,459 7,330,424 5,326,869 103,262 13,953,014


assets at FVTPL 1,553,891 12,466,421 4,129,115 229,614 18,379,041 4.55

Short term deposits 590,253 - - - 590,253 3.20

Other assets - - - 375,991 375,991

2,144,144 12,466,421 4,129,115 605,605 19,345,285 Liabilities Other


sensitivity gap 2,144,144 12,466,421 4,129,115 567,430 19,307,110

* Computed based on interest-bearing assets only.



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. 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 investment’s price caused by uncertainties in the economic, political and social environment will affect the NAV of the Fund. 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 valuation of the Fund’s investments. Rates 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 unquoted corporate bonds, unquoted government guaranteed bonds and deposits. The Fund’s exposure to the interest rate risk is mainly confined to unquoted corporate bonds and unquoted government guaranteed bonds. Interest rate risk sensitivity

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

Changes in rate Increase/(decrease)

Effect on profit for the financial year Increase/(decrease)

Basis points RM 2016 Financial assets at FVTPL 5/(5) (24,198)/24,266

2015 Financial assets at FVTPL 5/(5) (25,164)/25,227

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


2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) a. Market Risk (Contd.)

i. Interest rate risk (Contd.)

Interest rate risk exposure The following table analyses the Fund’s interest rate risk exposure. The Fund’s assets and liabilities are disclosed at fair value and categorised by the earlier of contractual re-pricing or maturity dates.

Up to 1 year

Above 1 year – 5

years

Above 5 years – 15

years

Non-exposure to interest rate

movement Total

Weighted average effective interest

rate* RM RM RM RM RM %


assets at FVTPL - 7,330,424 5,326,869 143,135 12,800,428 5.01

Short term deposits 1,192,459 - - - 1,192,459 3.30

Other assets - - - 10,136 10,136 1,192,459 7,330,424 5,326,869 153,271 14,003,023 Liabilities Other


sensitivity gap 1,192,459 7,330,424 5,326,869 103,262 13,953,014


assets at FVTPL 1,553,891 12,466,421 4,129,115 229,614 18,379,041 4.55

Short term deposits 590,253 - - - 590,253 3.20

Other assets - - - 375,991 375,991

2,144,144 12,466,421 4,129,115 605,605 19,345,285 Liabilities Other


sensitivity gap 2,144,144 12,466,421 4,129,115 567,430 19,307,110

* Computed based on interest-bearing assets only.



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.

iii. Credit quality of financial assets The Fund invests only in unquoted corporate bonds and unquoted government guaranteed bonds with at least investment grade credit rating by a credit rating agency. The following table analyses the Fund's portfolio of unquoted corporate bonds and unquoted government guaranteed bonds by rating category: Financial assets at FVTPL

Percentage of total

unquoted bonds Percentage of NAV 2016 2015 2016 2015 % % % % Rating AAA 41.0 15.6 37.6 14.9 A1 19.8 - 18.1 - AA3 12.6 31.9 11.6 30.4 AA- 6.3 4.4 5.8 4.2 AA1 6.3 4.4 5.7 4.2 AA+ 5.2 4.1 4.8 3.9 AA2 5.0 34.3 4.6 32.6 A2 - 1.4 - 1.3 Government

guaranteed 3.8 3.9 3.5 3.7 100.0 100.0 91.7 95.2



b. Credit Risk (Contd.) iii. Credit quality of financial assets (Contd.)

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

2016 2015 2016 2015 % % % % Rating P1 100.0 100.0 8.5 3.1

iv. Credit risk concentration

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

Percentage of total

unquoted bonds Percentage of NAV 2016 2015 2016 2015 % % % % Rating Plantations 24.8 14.5 22.8 13.7 Finance 23.9 31.3 21.9 29.8 Utilities 22.0 15.2 20.2 14.5 Industrial products 19.0 13.4 17.4 12.7 Properties 6.5 7.2 5.9 6.9 Transportation 3.8 4.6 3.5 4.4 Construction - 13.8 - 13.2 100.0 100.0 91.7 95.2



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 unitholders by the Manager are cancellable at the unitholders’ 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, 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.

Note Up to 1 year

Above 1 year - 5

years

Above 5 years - 15

years Total RM RM RM RM 2016 Assets Financial Assets at

FVTPL

143,135 7,330,424 5,326,869 12,800,428 Short term deposits 1,192,459 - - 1,192,459 Other assets 10,136 - - 10,136 (i) 1,345,730 7,330,424 5,326,869 14,003,023 Liabilities Other liabilities (ii) 50,009 - - 50,009 Equity (iii) 13,953,014 - - 13,953,014 Liquidity gap (12,657,293) 7,330,424 5,326,869 - 2015 Assets Financial Assets at

FVTPL

1,783,505 12,466,421 4,129,115 18,379,041 Short term deposits 590,253 - - 590,253 Other assets 375,991 - - 375,991 (i) 2,749,749 12,466,421 4,129,115 19,345,285 Liabilities Other liabilities (ii) 38,175 - - 38,175 Equity (iii) 19,307,110 - - 19,307,110 Liquidity gap (16,595,536) 12,466,421 4,129,115 -



c. Liquidity Risk (Contd.)

(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. 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.

(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 unitholders 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.

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”) issued by the International Accounting Standards Board (“IASB”).

The accounting policies adopted are consistent with those of the previous financial year except for the adoption of the new and amended MFRS which became effective for the Fund on 1 April 2015. The adoption of the new and amended MFRS did not have any significant impact on the financial position or performance of the Fund. The financial statements have been prepared on the historical cost basis except as disclosed in the accounting policies below.


3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

b. Standards and Amendments Issued But Not Yet Effective

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

Description

Effective for financial year

beginning on or after

Amendments to MFRS contained in the documents entitled

“Annual Improvements to MFRSs 2012 - 2014 Cycle” 1 January 2016 MFRS 14: Regulatory Deferral Accounts 1 January 2016 Amendments to MFRS 10, MFRS 12 and MFRS 128:

Investment Entities: Applying the Consolidation Exception 1 January 2016 Amendments to MFRS 11: Accounting for Acquisitions of

Interests in Joint Operations 1 January 2016 Amendments to MFRS 101: Disclosure Initiative 1 January 2016 Amendments to MFRS 116 and MFRS 138: Clarification of

Acceptable Methods of Depreciation and Amortisation 1 January 2016 Amendments to MFRS 116 and MFRS 141: Agriculture:

Bearer Plants 1 January 2016 Amendments to MFRS 127: Equity Method in Separate

Financial Statements 1 January 2016 MFRS 9: Financial Instruments 1 January 2018 MFRS 15: Revenue from Contracts with Customers 1 January 2018 MFRS 16: Leases 1 January 2019 Amendments to MFRS 10 and MFRS 128: Sale or

Contribution of Assets between an Investor and its Associate or Joint Venture

To be announced by MASB

The Fund will adopt the above pronouncements when they become effective in the respective financial periods. These pronouncements are not expected to have any significant impact to the financial statements of the Fund upon their initial application, other than MFRS 9. MFRS 9 replaces MFRS 139 on the following requirements: classification and measurement of financial assets and financial liabilities as defined in MFRS 139, impairment methodology and hedge accounting. The Fund is in the process of making an assessment of the impact of this Standard.


3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

c. Financial Assets

Financial assets 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. When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at FVTPL, directly attributable transaction costs. The Fund determines the classification of its financial assets at initial recognition.

i. Financial assets at FVTPL

Financial assets are classified as fi

Documents

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