KenAnGA mOney mArKet FUnD

interim rePOrt

For the Financial Period From 1 March 2018 to 31 August 2018

KenAnGA mOney mArKet FUnD

KenAnGA mOney mArKet FUnD

Contents Page

Corporate Directory iiDirectory of Manager’s Offices iiiFund information 1manager’s report 2 - 5Fund Performance 6 - 8trustee’s report 9Statement by the manager 10Financial Statements 11 - 36

ii Kenanga Money Market Fund Interim 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 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]: 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)Ismitz Matthew De Alwis

investment Committee 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 Money Market Fund Interim 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 Money Market Fund Interim Report

1. FUnD inFOrmAtiOn

1.1 Fund name

Kenanga money market Fund (KmmF or the Fund)

1.2 Fund Category / type

Money Market / Income

1.3 investment Objective

The Fund aims to provide investors with a regular income stream while maintaining capital stability.

1.4 investment Strategy

The Fund will invest in short term money market instruments, government or government backed securities and corporate bonds.

1.5 Duration

The Fund was launched on 9 November 2007 and 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

Maybank Overnight Repo Rate

1.7 Distribution Policy

Subject to availability of income, the Fund will distribute income monthly.

1.8 Breakdown of unit holdings of KmmF as at 31 August 2018

Size of holdingsno. of

unit holdersno. of

units held5,000 and below 55 127,6285,001 - 10,000 28 203,77910,001 - 50,000 63 1,603,91950,001 - 500,000 33 4,467,871500,001 and above 13 31,853,306total 192 38,256,503

Kenanga Money Market Fund Interim Report 2

2. mAnAGer’S rePOrt

2.1 explanation on whether the Fund has achieved its investment objective

The Fund has achieved its investment objective of providing investors with a regular income stream while maintaining capital stability.

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

Performance Chart Since Launch (9/11/2007 – 31/08/2018)Kenanga money market Fund vs maybank Overnight repo rate

Source: Novagni Analytics and Advisory

2.3 Investment strategies and policies employed during the financial period under review

During the period under review, the Fund invested in short-term money market instruments, government or government-backed securities and corporate bonds.

2.4 the Fund’s asset allocation as at 31 August 2018 and comparison with the previous financial period

Asset 31 Aug 2018 31 Aug 2017Unlisted bonds 12.9% 17.0%Unlisted commercial papers 32.5% 6.6%Short term deposits and cash 54.6% 76.4%

reason for the differences in asset allocation

As bond yields are expected to gradually increase from current levels as a result of interest rate hike expectations in the US, we have increased the allocation into commercial papers from 6.6% to 32.5% while allowing the short-term unlisted corporate bonds to mature during the period under review.

September 2018

FUND OBJECTIVE

Aims to provide investors with a regular income stream while

maintaining capital stability.

Fund Category/Type

Money Market / Income

FUND PERFORMANCE (%)

0.16

0.96

1.85

5.72

9.84

20.89

9.74

16.79

36.99

CALENDAR YEAR FUND PERFORMANCE (%) #

Benchmark

1.77

1.70

3.28

0.29

Annual Trustee Fee

CUMULATIVE FUND PERFORMANCE (%) #

Period

1 month

6 months

1 year

3 years

5 years

Since Launch

Fund Benchmark

0.02% p.a.

Launch Date

09 November 2007

Trustee

CIMB Commerce Trustee Berhad

Benchmark

Maybank Overnight Repo Rate

Designated Fund Manager

Felicia Tai

Sales Charge

Nil

Annual Management Fee

0.50% p.a.

#Source : Lipper, 31 August 2018

Fund

3.11

3.03

3.19

3.10

2.89

2017

2016

2015

2014

2013

1.92

2.02

1.90

1.82

Period

Kenanga Money Market FundLipper Analytics

15 Aug 2018

3-yearFund Volatility

Very Low

0

5

10

15

20

25

30

35

40

No

v 0

7

De

c 0

7

Jun

08

De

c 0

8

Jun

09

De

c 0

9

Jun

10

De

c 1

0

Jun

11

De

c 1

1

Jun

12

De

c 1

2

Jun

13

De

c 1

3

Jun

14

De

c 1

4

Jun

15

De

c 1

5

Jun

16

De

c 1

6

Jun

17

De

c 1

7

Jun

18

Aug

18

% Cumulative Return, Launch to 31/08/2018

Kenanga Money Market : 36.99 Maybank Overnight Repo Rate : 20.89

Source: Novagni Analytics and Advisory

Redemption Charge

Nil

All fees and charges payable to the Manager and the Trustee are

subject to GST as may be imposed by the government or other

authorities from time to time.

NAV PER UNIT *

RM 0.5518

FUND SIZE *

RM 21.11 million

HISTORICAL FUND PRICE *

Since Inception Date

Highest

Lowest

RM 0.5879

RM 0.5000

26-Sep-13

9-Nov-07

Date

Gross Distribution

Unit SplitRM Yield (%)

ASSET ALLOCATION (% NAV) * SECTOR ALLOCATION (% NAV) *

11.80%

* Source: Kenanga Investors Berhad, 31 August 2018

Based on the fund’s portfolio returns as at 15 August 2018, the Volatility Factor (VF) for this fund is 0.11 and is classified as “Very Low”. (Source: Lipper). “Very Low” includes

funds with VF that are 0 and less than or equal to 1.885 (source: Lipper). The VF means there is a possibility for the fund in generating an upside return or downside return

around this VF. The Volatility Class (VC) is assigned by Lipper based on quintile ranks of VF for qualified funds. VF is subject to monthly revision and VC will be revised every

six months. The fund’s portfolio may have changed since this date and there is no guarantee that the fund will continue to have the same VF or VC in the future. Presently, only

funds launched in the market for at least 36 months will display the VF and its VC. The Master Prospectus dated 30 June 2017 and the Supplemental Prospectus (if any), its

Product Highlights Sheets (“PHS”) or Supplemental Disclosure Document (“SDD”) (if any) have been registered with the Securities Commission Malaysia, who takes no

responsibility for its contents. A copy of the Master Prospectus, Supplemental Prospectus (if any), SDD (if any) and the PHS are obtainable at our offices. Application for Units

can only be made on receipt of application form referred to in and accompanying the Master Prospectus and/or Supplemental Prospectus (if any), SDD (if any) and PHS.

Investors are advised to read and understand the Master Prospectus, its PHS and any other relevant product disclosure documents involved before investing. Investors are also

advised to consider the fees and charges before investing. Unit prices and distributions may go down as well as up. Where a unit split/distribution is declared, investors are

advised that following the issue of additional units/distribution, the NAV per unit will be reduced from pre-unit split NAV/cum-distribution NAV to post-unit split NAV/ex-

distribution NAV. Where a unit split is declared, investors should note that the value of their investment in Malaysian Ringgit will remain unchanged after the distribution of the

additional units. A Fund’s track record does not guarantee its future performance. Investors are advised to read and understand the contents of the unit trust loan financing risk

-

-

-

0.27%

0.27%

0.27%

TOP FIXED INCOME PLACEMENTS (% NAV) *

1

2

3

14.30%

12.76%

11.84%

DRB-HICOM BHD 4.850% 30/11/2018

SABAH DEVELOPMENT BANK 0.0020180925

DISTRIBUTION HISTORY *

4

PAC LEASE BHD 0.0020180903

PAC LEASE BHD 0.0020181003

0.15 sen

0.15 sen

0.15 sen

23-Aug-18

24-Jul-18

25-Jun-18

32.40%

53.80%

50.70%

67.60%

46.20%

49.30%

June

July

August

Liquidity CP / Bonds / Others

49.3%

36.4%

14.3%

Short Term Deposit and Cash

Commercial Papers

Corporate Bonds (Unsecured)

additional units. A Fund’s track record does not guarantee its future performance. Investors are advised to read and understand the contents of the unit trust loan financing risk

disclosure statement before deciding to borrow to purchase units. Kenanga Investors Berhad is committed to preventing Conflict of Interest between its various businesses and

activities and between its clients / directors / shareholders and employees by having in place procedures and measures for identifying and properly managing any apparent,

potential and perceived Conflict of Interest by making disclosures to Clients, where appropriate. The Manager wishes to highlight the specific risks of the Fund are credit and

default risk, interest rate risk and reinvestment risk.


2.5 Fund performance analysis based on nAV per unit (adjusted for income distribution) since last review period

Period under review

Kenanga money market Fund 1.70%maybank Overnight repo rate 0.96%

Source: Lipper

For the period under review, the Fund registered a return of 1.70% against its benchmark return of 0.96%, outperforming its benchmark by 74 bps. The outperformance was mainly due to the Fund’s investments in commercial papers, short-term corporate bonds and better interest rates obtained from longer-tenured deposit placements as compared to its benchmark.

2.6 review of the market

market review

On 22 March 2018, the US Fed continued to embark on its tightening cycle, raising the Fed Funds Rate (FFR) by 25 basis points (bps) to 1.75% in the Federal Open Market Committee (FOMC) meeting. From concerns over increased interest rates for the rest of the year, trade war concerns took over and pressured yields lower towards the final week of the month. Consequently, the US Treasury (UST) yield curve flattened in March, with the 2x10 spread narrowed to 47 bps led by 10-year UST yield -13 bps to 2.86%, while the 2-year yield increased by 2 bps to 2.27%. On local policy front, Bank Negara Malaysia (BNM) kept the Overnight Policy Rate (OPR) steady at 3.25% in the Monetary Policy Committee (MPC) meeting held in March. Boosted by UST rally, MYR strength, central bank policy and buying on dip opportunities, the 3-, 5- and 10-year benchmark Malaysian Government Securities (MGS) yields fell by 12 bps, 15 bps and 9 bps to close at 3.45%, 3.48% and 3.95% respectively.

In April, the FOMC minutes and the Fed’s Beige Book report highlighted expectation of gradual rate hikes supported by better labour market conditions, above-trend growth and moderate inflationary pressure. Following that, the 2-year UST yield continued to close higher by 22 bps M-o-M at 2.49%, while the 10-year UST yield broke the 3.00% level to peak at 3.03% in the final week of the month, before easing to 2.95% (+21bps M-o-M) month-end, on the back of easing trade and geopolitical tensions. Moving in tandem with rising UST yields, the 3-year, 5-year, 7-year and 10-year MGS also peaked across the curve at 3.77%, 3.89%, 4.11% and 4.20% before easing to 3.63% (+18bps M-o-M), 3.77%, 3.97% (+14bps M-o-M) and 4.13% (+18bps M-o-M) respectively at the end of the month.

Beginning of May, the FFR was kept at 1.75% during the FOMC meeting. The FOMC statement was on the dovish side given the recent economic data indicating that the economic outlook had changed little since the previous meeting. Subsequently, the US-China trade war concerns returned with the US slapping tariffs on China, as well as President Trump’s administration imposing tariffs on aluminium and steel on Canada, Mexico and the European Union. The Fed’s Beige Book report highlighted that the consumer spending was ‘soft’ although the economy is on moderate expansion and manufacturing activity is stronger. Consequently, the 2-year and 10-year UST yields closed lower by 9bps and 12bps M-o-M respectively at 2.40% and 2.83% during the month. Similarly, BNM kept the OPR unchanged at 3.25%, citing that the domestic economic outlook remains positive, the financial sector is strong and monetary and financial conditions are supportive of economic growth in the post-election environment. However, investors were cautious due to the uncertainties surrounding policy direction of the new government as well as its impact on the Malaysia’s sovereign rating sending the 3-, 5-, 7- and 10-year benchmark MGS yields higher by 5-10bps to 3.70%, 3.82%, 4.02% and 4.20% respectively.


2.6 review of the market (Contd.)

market review (contd.)

In June, the Fed raised the upper limit of the FFR by 25 bps to 2% led by improving employment, household spending and inflation. The FOMC said it remains on track for four hikes this year with inflation rising to 2.8% from recent lows 2.5% year-on-year. Meantime, geopolitics and trade concerns vacillated - US & China downplayed and reigniting fears while US & North Korea appeared cooperative on the denuclearization agreement. Consequently, 2 and 10-year breached peak levels mid-June at 2.55% and 3.11% respectively before easing to 2.53% and 2.86% month-end (+13bps and +3bps M-o-M). The UST yield curve has flattened further with the 2x10 spread at 33 bps end-June (43 bps in previous month). In contrast, the MGS yield curve steepened modestly at 56 bps (50 bps in previous month) as investors shed duration, grinding the 3-year MGS yield lower by 6 bps to 3.64%, while 10-year benchmark yield remains unchanged at 4.20%.

In July, the UST yield curve continued to bearish flatten with 2x10 spread of 29 bps (33 bps in previous month), led by 2Y UST, which increased 14 bps M-o-M to 2.67% while the 10Y added 10 bps M-o-M to 2.96% due to rising interest rates outlook as Fed tightens yet long term rates are pressed down amid threats to inflation and growth especially with the US-led trade conflicts. Locally, the OPR was held at 3.25% in the MPC meeting held in July. The MGS yield curve bullish flattened to 52 bps (56 bps in June) as investors returned looking for yield pickup supported by the neutral-to-dovish tint in the MPC statement, pushing the yields lower by 9-13 bps M-o-M across the tenure (3Y: 3.55% (-9bps); 5Y: 3.75% (-11bps); 7Y: 3.96% (-11bps) and 10Y: 4.07% (-14bps)).

Beginning of August, the FOMC kept the FFR unchanged at 2%, with hints of a hike in September as anticipated. The UST yield curve continued to flatten in August with its spread narrowing to 23 bps. Despite increasing debt supply along with another two rate hikes for the year, the UST market rallied, with the 2Y yield closed 4 bps lower at 2.63%, while the 10Y yield was down 10bps to 2.86% due to safe haven flows arising from concerns over global trade wars. Similarly, MGS also rallied during the month, partly attributed to the release of weaker Gross Domestic Product (GDP) growth of 4.5% Y-o-Y for 2Q18 (1Q18: 5.4% Y-oY). As investors’ interests were seen mainly on the short to medium MGS, the MGS benchmark yield curve bullish steepened to 56bps with 3Y yield rallied the most at 7bps lower to 3.51% vs 10Y yield down by 3bps to 4.04%.

market Outlook

We maintain our expectations on MGS yields to gradually increase from current levels as a result of rising bond yields, with Fed remaining on track to hike its benchmark interest rates. However, MGS yields are anticipated to continue to be well supported by onshore investors as seen in the healthy bid-to-cover ratios and short-lived yields uptick, which were quickly met with domestic bids. Any excessive upward movement in bond yields may continue to pave the way for tactical bargain hunts for investors.

On local monetary policy, we maintain our view on OPR to remain at 3.25% throughout the

rest of 2018 as CPI is expected to stay low, with the latest 8M2018 average of 1.4% and moderate GDP growth.


2.7 Distribution

For the financial year under review, the Fund has declared the following distribution:

Distribution Date

Gross/net distribution

per unit (sen)

Cum-nAV per unit

(rm)

ex-nAV per unit

(rm)

26 March 2018 0.15 0.5528 0.5513 26 April 2018 0.15 0.5528 0.5513 24 May 2018 0.15 0.5527 0.5512 25 June 2018 0.15 0.5529 0.5514 24 July 2018 0.15 0.5528 0.5513 23 August 2018 0.15 0.5529 0.5514

0.90

2.8 Details of any unit split exercise

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

2.9 Significant changes in the state of affair of the Fund during the financial period

There were no significant changes in the state of affair of the Fund during the financial period 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 unit holders

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

2.11 Cross trade

During the financial period under review, cross-trade transactions were undertaken by investment 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.

2.12 rebates & 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. For the financial period under review, the Manager has received soft commissions from the stockbrokers.


3. FUnD PerFOrmAnCe

3.1 Details of portfolio composition of the Fund for the financial period as at 31 August 2018 against last three financial years as at 28/29 February are as follows:

a. Distribution among industry sectors and category of investments:

As at Fy Fy Fy31.8.2018 2018 2017 2016

% % % %

Unlisted corporate bonds 12.9 21.4 29.8 46.7Unlisted government

guaranteed bonds - - 0.6 -Unlisted commercial

papers 32.5 - - 19.4Short term deposits and

cash 54.6 78.6 69.6 33.9100.0 100.0 100.0 100.0

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

b. Distribution among markets

The Fund invests in unlisted bonds, unlisted commercial paper and cash instruments only.


3.2 Performance details of the Fund for the financial period ended 31 August 2018 against last 3 financial years ended 28/29 February are as follows:

Financial period

from 1.3.2018 to

31.8.2018Fy

2018Fy

2017Fy

2016

Net asset value (“NAV”) (RM Million) 21.11* 17.91 18.43 15.79

Units in circulation (Million) 38.26 32.46 33.34 28.42 NAV per unit (RM) 0.5518* 0.5515 0.5526 0.5558 Highest NAV per unit (RM) 0.5529 0.5539 0.5575 0.5671 Lowest NAV per unit (RM) 0.5513 0.5512 0.5524 0.5558 Total return (%) 1.70 3.11 3.05 3.15- Capital growth (%) 0.05 -0.20 -0.58 -1.75- Income growth (%) 1.65 3.31 3.63 4.90 Gross distribution per unit (sen) 0.90 1.80 1.99 2.73 Net distribution per unit (sen) 0.90 1.80 1.99 2.73 Management expense ratio

(“MER”) (%) 1 0.58 0.64 0.66 0.63 Portfolio turnover ratio (“PTR”)

(times) 2 19.65 33.40 33.90 36.71

Note: TotalreturnistheactualreturnoftheFundfortherespectivefinancialperiod/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 Sinvestment securities of the Fund divided by the average fund size calculated on a daily basis.

1. MERisloweragainstpreviousfinancialyearmainlyduetohigheraveragefundsizeduringfinancialperiodunderreview.

2.PTRislowerthanpreviousfinancialyearduetoshorterperiodunderreview.

* Based on bid price fair valuation method on all investments held by the Fund as at 31August2018,theNAVandNAVperunitwouldbeRM21.10millionandRM0.5515respectively.(AsdisclosedunderNote13ofthefinancialstatements)

# Date of distribution is shown in part 2.7 - Distribution


3.3 Average total return of the Fund

1 year31 Aug 17 - 31 Aug 18

3 years31 Aug 15 - 31 Aug 18

5 years31 Aug 13 - 31 Aug 18

Kenanga money market Fund 3.28% 3.10% 3.11%maybank Overnight repo rate 1.85% 1.86% 1.88%

Source: Lipper

3.4 Annual total return of the Fund

Period under review

28 Feb 18 - 31 Aug 18

1 year28 Feb 17 - 28 Feb 18

1 year29 Feb 16 - 28 Feb 17

1 year28 Feb 15 - 29 Feb 16

1 year28 Feb 14 - 28 Feb 15

Kenanga money market Fund 1.70% 3.11% 3.06% 3.15% 3.15%maybank Overnight repo rate 0.96% 1.78% 1.87% 2.02% 1.93%

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 mOney mArKet FUnD

We, CIMB Commerce Trustee Berhad being the trustee of Kenanga Money Market 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 period ended 31 August 2018.

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

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

and relevant regulatory requirements; and

d) The distribution of returns by the Fund are relevant to and reflects the investment objectives of the Fund.

For and on behalf of CIMB Commerce Trustee Berhad Lee Kooi Yoke Chief Operating Officer Kuala Lumpur, Malaysia

15 October 2018


5. 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 August 2018 and the related statement of comprehensive income, statement of changes in net asset value and statement of cash flows for the financial period from 1 March 2018 to 31 August 2018 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 Money Market Fund as at 31 August 2018 and of its financial performance and cash flows for the financial period from 1 March 2018 to 31 August 2018 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

Kuala Lumpur, Malaysia

15 October 2018


6. StAtement OF COmPreHenSiVe inCOmeFOr tHe FinAnCiAL PeriOD FrOm 1 mArCH 2018 tO 31 AUGUSt 2018 (unaudited)

note1.3.2018 to 31.8.2018

1.3.2017 to 31.8.2017

rm rm

inVeStment inCOme

Interest income 350,145 323,384 Net gain from investments:- Financial assets at fair value through profit or

loss (“FVTPL”) 4 57,201 8,402 407,346 331,786

eXPenSeS

Manager’s fee 5 52,460 45,395 Trustee’s fee 6 2,098 1,816 Auditors’ remuneration 4,512 4,449 Tax agent’s fee 2,006 2,005 Administration expenses 5,668 4,480

66,744 58,145

net inCOme BeFOre tAX 340,602 273,641

Income tax 7 - -

net inCOme AFter tAX, rePreSentinG tOtAL COmPreHenSiVe inCOme FOr tHe FinAnCiAL PeriOD 340,602 273,641

Net income after tax is made up as follows:Realised gain 347,989 277,013 Unrealised loss 4 (7,387) (3,372)

340,602 273,641

Distribution for the financial period:Net distribution (RM) 8 335,358 293,025 Gross/Net distribution per unit (sen) 8 0.90 0.90

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


6.1 StAtement OF FinAnCiAL POSitiOnAS At 31 AUGUSt 2018 (unaudited)

note 31.8.2018 31.8.2017rm rm

ASSetS

inVeStmentS

Financial assets at FVTPL 4 10,728,019 4,278,090 Short term deposits 9 12,865,000 13,890,000

23,593,019 18,168,090

OtHer ASSetS

Other receivable 10 16,618 43,443 Cash at bank 15,978 4,361

32,596 47,804

tOtAL ASSetS 23,625,615 18,215,894

LiABiLitieS

Amount due to Manager 8,701 7,758 Amount due to Trustee 348 310 Amount due to licensed financial institutions 11 2,491,986 -Other payables 12 24,929 15,992 tOtAL LiABiLitieS 2,525,964 24,060

eQUity

Unit holders’ contribution 17,649,902 14,726,994 Retained earnings 3,449,749 3,464,840 net ASSet VALUe (“nAV”) AttriBUtABLe

tO Unit HOLDerS 13 21,099,651 18,191,834

tOtAL LiABiLitieS AnD eQUity 23,625,615 18,215,894

nUmBer OF UnitS in CirCULAtiOn 13(a) 38,256,503 32,955,642

net ASSet VALUe Per Unit (rm) 14 0.5515 0.5520



6.2 StAtement OF CHAnGeS in net ASSet VALUeFOr tHe FinAnCiAL PeriOD FrOm 1 mArCH 2018 tO 31 AUGUSt 2018 (unaudited)

noteUnit holders’ contribution

retained earnings total nAV

rm rm rm

1.3.2018 to 31.8.2018At beginning of the financial

period 14,455,441 3,450,269 17,905,710 Total comprehensive income - 340,602 340,602 Creation of units 13(a) 11,434,580 - 11,434,580 Cancellation of units 13(a) (8,570,775) - (8,570,775)Distribution equalisation 13(a) (5,764) - (5,764)Distribution 8 5,764 (341,122) (335,358)Reinvest of income distributed 13(a) 330,656 - 330,656 At end of the financial period 17,649,902 3,449,749 21,099,651

1.3.2017 to 31.8.2017At beginning of the financial

period 14,940,378 3,485,878 18,426,256 Total comprehensive income - 273,641 273,641 Creation of units 13(a) 22,709,081 - 22,709,081 Cancellation of units 13(a) (23,215,490) - (23,215,490)Distribution equalisation 13(a) (1,654) - (1,654)Distribution 8 1,654 (294,679) (293,025)Reinvest of income distributed 13(a) 293,025 - 293,025 At end of the financial period 14,726,994 3,464,840 18,191,834



6.3 StAtement OF CASH FLOWSFOr tHe FinAnCiAL PeriOD FrOm 1 mArCH 2018 tO 31 AUGUSt 2018 (unaudited)

1.3.2018 to 31.8.2018

1.3.2017 to 31.8.2017

rm rm

CASH FLOWS FrOm OPerAtinG AnD inVeStinG ACtiVitieS

Proceeds from the maturity of investments 32,734,922 83,325,599Proceeds from sale of financial assets at FVTPL 13,809,100 4,360,000 Interest received 355,470 275,145 Auditors’ remuneration paid - (9,000)Trustee’s fee paid (2,032) (1,790)Payments for other fees and expenses (5,198) (7,086)Manager’s fee paid (50,818) (44,739)Purchase of financial assets at FVTPL (18,163,281) (3,013,733)Placement of investments (27,310,082) 82,949,190Net cash generated from operating and investing

activities 1,368,081 1,935,206

CASH FLOWS FrOm FinAnCinG ACtiVitieS

Cash received from units created 11,437,956 22,720,198 Cash paid on units cancelled (8,579,915) (23,228,261)Distribution paid (4,702) -Net cash generated from/(used in) financing activities 2,853,339 (508,063)

net inCreASe in CASH AnD CASH eQUiVALentS 4,221,420 1,427,143 CASH AnD CASH eQUiVALentS At BeGinninG OF

tHe FinAnCiAL PeriOD 2,648,558 111,128 CASH AnD CASH eQUiVALentS At enD OF tHe

FinAnCiAL PeriOD 6,869,978 1,538,361

Cash and cash equivalents comprise:Cash at bank 15,978 4,361 Short term deposits 6,854,000 1,534,000

6,869,978 1,538,361



6.4 nOteS tO tHe FinAnCiAL StAtementSFOr tHe FinAnCiAL PeriOD FrOm 1 mArCH 2018 tO 31 AUGUSt 2018 (unaudited)

1. tHe FUnD, tHe mAnAGer AnD tHeir PrinCiPAL ACtiVitieS

Kenanga Money Market Fund (‘‘the Fund’’) was constituted pursuant to the executed Master Deed dated 29 August 1997 (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) . 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 9 November 2007 and will continue to be in operation until terminated in accordance to 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 unit holders with a regular income stream while maintaining capital stability.

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 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.

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.

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.


2. FinAnCiAL riSK mAnAGement OBJeCtiVeS AnD POLiCieS (COntD.)

a. market risk (contd.)

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 commercial papers and short term deposits.

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

interest rate risk sensitivity

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

Changes in rate

effects on profit for

the financial period

increase/(Decrease)

increase/(Decrease)

Basis points rm

31.8.2018Financial assets at FVTPL 5/(5) (691)/467

31.8.2017Financial assets at FVTPL 5/(5) (390)/401

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



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 financial assets and financial liabilities are disclosed at fair value and categorised by the earlier of contractual re-pricing or maturity dates.

Up to 1 year

non-exposure

to interest rate

movement total

Weighted average effective interest

rate*rm rm rm %

31.8.2018AssetsFinancial assets at

FVTPL 10,690,699 37,320 10,728,019 4.6 Short term deposits 12,865,000 - 12,865,000 3.5 Other assets - 32,596 32,596

23,555,699 69,916 23,625,615

LiabilitiesOther liabilities - 2,501,035 2,501,035

total interest rate sensitivity gap 23,555,699 (2,431,119) 21,124,580

31.8.2017AssetsFinancial assets at

FVTPL 4,240,287 37,803 4,278,090 4.6 Short term deposits 13,890,000 - 13,890,000 3.5 Other assets - 47,804 47,804

18,130,287 85,607 18,215,894

LiabilitiesOther liabilities - 8,068 8,068

total interest rate sensitivity gap 18,130,287 77,539 18,207,826

* 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 unlisted corporate bonds and unlisted commercial papers 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 commercial papers by rating category:

Unlisted corporate bonds

Percentage of total unlisted corporate

bonds Percentage of nAV31.8.2018 31.8.2017 31.8.2018 31.8.2017

% % % %

ratingA+ 100.0 - 14.5 -A1 - 100.0 - 16.9

100.0 100.0 14.5 16.9

Unlisted commercial papers

Percentage of total unlisted commercial

papers Percentage of nAV31.8.2018 31.8.2017 31.8.2018 31.8.2017

% % % %

ratingP1 100.0 100.0 36.3 6.6



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

31.8.2018 31.8.2017 31.8.2018 31.8.2017% % % %

ratingP1 70.4 100.0 42.9 76.4 WR 29.6 - 18.1 -

100.0 100.0 61.0 76.4

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 commercial papers by sectoral distribution:


Percentage of total unlisted corporate

bonds Percentage of nAV31.8.2018 31.8.2017 31.8.2018 31.8.2017

% % % %

Industrial products 100.0 - 14.5 - Plantations - 100.0 - 16.9

100.0 100.0 14.5 16.9


Percentage of total unlisted commercial

papers Percentage of nAV31.8.2018 31.8.2017 31.8.2018 31.8.2017

% % % %

Finance 100.0 100.0 36.3 6.6



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.

Up to 1 yearnote 31.8.2018 31.8.2017

rm rm

AssetsFinancial assets at FVTPL 10,728,019 4,278,090 Short term deposits 12,865,000 13,890,000 Other assets 32,596 47,804

i. 23,625,615 18,215,894

LiabilitiesOther liabilities ii. 2,501,035 8,068

Equity iii. 21,099,651 18,191,834

Liquidity gap 24,929 15,992

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.



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”.

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 accounting policies adopted are consistent with those of the previous financial period except for the adoption of the new and amended MFRS which became effective for the Fund on 1 March 2018. 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

b. Standards, amendments and interpretations issued but not yet effective

As at the reporting date, the following Standards, Amendments and Interpretation Committee’s (“IC”) Interpretations that have been issued by MASB will be effective for the Fund in future periods. The Fund intends to adopt the relevant standards when they become effective.

Description

Effective for financial period beginning on

or after

Amendments to MFRS contained in the documents entitled “Annual improvements to MFRS Standards 2014 - 2016 Cycle” 1 January 2018

Amendments to MFRS 1: First-time Adoption of Malaysian Financial Reporting Standards contained in the documents entitled “Annual Improvements to MFRS Standards 2014-2016 Cycle” 1 January 2018

Amendments to MFRS 128: Investment in Associates and Joint Ventures contained in the documents entitled “Annual improvements to MFRS Standards 2014 - 2016 Cycle” 1 January 2018

MFRS 9: Financial Instruments 1 January 2018MFRS 15: Revenue from Contracts with Customers 1 January 2018Clarifications to MFRS 15: Revenue from Contracts with

Customers 1 January 2018Amendments to MFRS 2: ClassificationandMeasurement

of Shared-based Payment Transactions 1 January 2018

Amendments to MFRS 4: Applying MFRS 9 Financial Instruments with MFRS 4 Insurance Contracts

Temporary exemption from MFRS 9 subject

to certain criteria being met for annual periods

beginning on or after1 January 2018

Amendments to MFRS 140: Transfers of Investment Property 1 January 2018

IC Interpretation 22: Foreign Currency Transactions and Advance Consideration 1 January 2018

Amendments to MFRS contained in the documents entitled “Annual improvements to MFRS Standards 2015-2017Cycle” 1 January 2019

Amendments to MFRS 3: Business Combinations contained in the documents entitled “Annual improvementstoMFRSStandards2015-2017Cycle” 1 January 2019

Amendments to MFRS 11: Joint Arrangements contained in the documents entitled “Annual improvements to MFRSStandards2015-2017Cycle” 1 January 2019


3. SUmmAry OF SiGniFiCAnt ACCOUntinG POLiCieS (COntD.)

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

Description

Effective for financial period beginning on

or after

Amendments to MFRS 112: Income Tax Consequences ofPaymentsonFinancialInstrumentsClassifiedasEquity contained in the documents entitled “Annual improvementstoMFRSStandards2015-2017Cycle” 1 January 2019

Amendments to MFRS 119: PlanAmendment,Curtailmentor Settlement 1 January 2019

Amendments to MFRS 123: Borrowing Costs Eligible for Capitalisation contained in the documents entitled “AnnualimprovementstoMFRSStandards2015-2017Cycle” 1 January 2019

MFRS 16: Leases 1 January 2019Amendments to MFRS 9: Prepayment Features with

Negative Compensation 1 January 2019Amendments to MFRS 128: Long-term interests in

Associates and Joint Ventures 1 January 2019IC Interpretation 23: Uncertainty Over Income Tax

Treatments 1 January 2019Amendments to MFRS 2: Share-based Payment 1 January 2020Amendments to MFRS 3: Business Combinations 1 January 2020Amendments to MFRS 6: Exploration for and Evaluation of

Mineral Resources 1 January 2020Amendments to MFRS 14: Regulatory Deferral Accounts 1 January 2020Amendments to MFRS 101: Presentation of Financial

Statements 1 January 2020Amendments to MFRS 108: AccountingPolicies,Changes

in Accounting Estimates and Errors 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 2020Amendments to IC Interpretation 12: Service Concession

Arrangements 1 January 2020Amendments to IC Interpretation 19: Extinguishing

Financial Liabilities with Equity Instruments 1 January 2020Amendments to IC Interpretation 22: Foreign Currency

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

Website Costs 1 January 2020MFRS 17: Insurance Contracts 1 January 2021Amendments 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



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

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 does not expect any change in classification and any potential material financial impact arising from the adoption of this standard.

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 financial assets at FVTPL if they are held for trading or are designated as such upon initial recognition.

Financial assets held for trading include unlisted corporate bonds and unlisted commercial papers acquired principally for the purpose of selling in the near term.

Subsequent to initial recognition, financial assets at FVTPL are measured at fair value. Changes in the fair value of those financial instruments are recorded in profit or loss.

Interest earned elements of such instruments is recorded in “interest income”.

ii. receivables

Financial assets with fixed or determinable payments that are not quoted in an active market are classified as receivables.

Subsequent to initial recognition, receivables are measured at amortised cost using the effective interest method. Gain or loss is recognised in profit or loss when the receivable is derecognised or impaired, and through the amortisation process.

A financial asset is derecognised when the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received is recognised in profit or loss.



d. Impairment of financial assets

The Fund assesses at each reporting date whether there is any objective evidence that a financial asset is impaired.

To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Fund considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.

If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets, with the exception of receivables, where the carrying amount is reduced through the use of an allowance account. When a receivable becomes uncollectible, it is written off against the allowance account.

If, in a subsequent year, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the assets does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.

e. 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.

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.

f. Cash and cash equivalents

For the purposes of the statement of cash flows, cash and cash equivalents include cash at bank and short term deposits with licensed financial institutions with insignificant risk of changes in value.

g. income tax

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

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



h. 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.

i. Financial liabilities

Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability.

Financial 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 instrument. The Fund’s financial liabilities are classified as other financial liabilities. The Fund’s financial liabilities are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

A financial liability is derecognised when the obligation under the liability is extinguished. Gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.

j. 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.

k. 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.

l. Distribution

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.

m. 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 period.


4. FinAnCiAL ASSetS At FVtPL

31.8.2018 31.8.2017rm rm

Financial assets held for trading, at FVTPL:Unlisted corporate bonds 3,052,307 3,084,194 Unlisted commercial papers 7,675,712 1,193,896

10,728,019 4,278,090

1.3.2018 to 31.8.2018

1.3.2017 to 31.8.2017

rm rm

Net gain on financial assets at FVTPL comprised:Realised gain on disposals 64,588 11,774 Unrealised changes in fair values (7,387) (3,372)

57,201 8,402

Details of financial assets at FVTPL as at 31 August 2018:

Quantity Amotised

cost Fair value Percentage

of nAVrm rm %


DRB-Hicom Berhad maturing on 30/11/2018 3,020,000 3,052,713 3,052,307 14.4

total unlisted corporate bonds 3,052,713 3,052,307 14.4


Pac Lease Berhad maturing on 03/09/2018 2,500,000 2,498,918 2,500,000 11.9

Pac Lease Berhad maturing on 03/10/2018 2,500,000 2,491,986 2,491,986 11.8

Sabah Development Bank Berhad maturing on 25/09/2018 2,700,000 2,691,442 2,683,726 12.7

total unlisted commercial papers 7,682,346 7,675,712 36.4

Total financial assets at FVtPL 10,735,059 10,728,019 50.8

Unrealised loss on financial assets at FVtPL (7,040)


5. mAnAGer’S Fee

The Manager’s fee is computed on a daily basis at a rate not exceeding 1.00% 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 0.50% per annum of the NAV of the Fund (financial period from 1 March 2017 to 31 August 2017: 0.50% per annum).

6. trUStee’S Fee

Pursuant to the Fifth Master Supplemental Deed dated 25 July 2014, the Trustee’s fee is computed at a rate not exceeding 0.02% per annum of the NAV of the Fund effective from 1 August 2014.

The Trustee’s fee is currently computed at 0.02% per annum of the NAV of the Fund (financial period from 1 March 2017 to 31 August 2017: 0.02% 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 periods.

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:

1.3.2018 to 31.8.2018

1.3.2017 to 31.8.2017

rm rm

Net income before tax 340,602 273,641

Tax at Malaysian statutory tax rate of 24% (financial period from 1 March 2017 to 31 August 2017: 24%) 81,744 65,674

Tax effect of:Income not subject to tax (99,536) (80,438)Loss not deductible for tax purposes 1,773 809 Expenses not deductible for tax purposes 1,563 1,752 Restriction on tax deductible expenses for unit trust

fund 14,456 12,203 Income tax for the financial period - -


8. DiStriBUtiOn

Distributions to unit holders were made on the following dates:

1.3.2018 to31.8.2018

1.3.2017 to 31.8.2017

rm rm

26 March 2018/29 March 2017 50,722 48,055 26 April 2018/26 April 2017 52,330 49,734 24 May 2018/24 May 2017 55,733 46,850 25 June 2018/20 June 2017 60,918 49,173 24 July 2018/24 July 2017 58,235 48,891 23 August 2018/23 August 2017 57,420 50,322

335,358 293,025

Distribution to unit holders was from the following sources:

1.3.2018 to 31.8.2018

1.3.2017 to 31.8.2017

rm rm

Distribution out of distribution equalisation (Note 12(a)) (5,764) (1,654)Undistributed income brought forward 407,866 352,824

402,102 351,170 Less: Expenses (66,744) (58,145)Distribution for the financial period 335,358 293,025

Gross/Net distribution per unit (sen) 0.90 0.90

The income distribution included an amount of RM 407,866 (financial period from 1 March 2017 to 31 August 2017: RM352,824) which is from previous financial periods’ realised gain.

The income distribution for the financial period from 1 March 2018 to 31 August 2018 was proposed before taking into account the unrealised loss brought forward of RM147 and unrealised loss for the financial period of RM7,387 (financial period from 1 March 2017 to 31 August 2017 RM3,372) which are carried forward to the next financial period.

9. SHOrt term DePOSitS

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

31.8.2018 31.8.2017rm rm

Short term deposits (tenure: more than 7 days) 6,011,000 12,356,000Short term deposits (tenure: 7 days or less) 6,854,000 1,534,000

12,865,000 13,890,000


10. OtHer reCeiVABLe

31.8.2018 31.8.2017rm rm

Interest receivable from short term deposits 16,618 43,443

11. AmOUnt DUe tO LiCenSeD FinAnCiAL inStitUtiOnS

Amount due to licensed financial institutions relates to the amount to be paid to licensed financial institutions arising from the purchase of investments.

12. OtHer PAyBLeS

31.8.2018 31.8.2017rm rm

Accrual for auditors’ remuneration 13,512 3,949 Accrual for tax agent’s fees 6,506 6,005 Provision for printing and other expenses 4,911 6,038

24,929 15,992

13. net ASSet VALUe AttriBUtABLe tO Unit HOLDerS

NAV attributed to unit holders is represented by:

note 31.8.2018 31.8.2017rm rm

Unit holders’ contribution (a) 17,649,902 14,726,994

Retained earnings:Realised reserve 3,456,789 3,461,197 Unrealised reserve (7,040) 3,643

3,449,749 3,464,840

21,099,651 18,191,834


13. net ASSet VALUe AttriBUtABLe tO Unit HOLDerS (COntD.)

(a) Unit holders’ contribution

1.3.2018 to 31.8.2018 1.3.2017 to 31.8.2017no. of units rm no. of units rm

At beginning of the financial period 32,463,165 14,455,441 33,343,554 14,940,378

Add: Creation of units 20,732,703 11,434,580 41,105,493 22,709,081

Less: Cancellation of units (15,539,119) (8,570,775) (42,024,314) (23,215,490)

Distribution equalisation - (5,764) - (1,654)

Distribution (Note 8) - 5,764 - 1,654

Reinvestment of income distributed 599,754 330,656 530,909 293,025

At end of the financial period 38,256,503 17,649,902 32,955,642 14,726,994

The number of units legally or beneficially held by the Manager, Kenanga Investors Berhad, and parties related to the Manager as at 31 August 2018 were nil (31 August 2017: nil).

14. net ASSet VALUe Per Unit

In line with the adoption of MFRS 139, financial assets at FVTPL have been valued at the bid prices at the close of business. 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.

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:

1.3.2018 to 31.8.2018 1.3.2017 to 31.8.2017rm rm/Unit rm rm/Unit

NAV attributable to unit holders for creation/cancellation of units 21,109,825 0.5518 18,192,308 0.5520

Effects of adopting bid prices as fair value (10,174) (0.0003) (474) -

NAV attributable to unit holders per statement of financial position 21,099,651 0.5515 18,191,834 0.5520


15. POrtFOLiO tUrnOVer rAtiO (“Ptr”)

PTR for the financial period from 1 March 2018 to 31 August 2018 is 19.65 times (financial period from 1 March 2017 to 31 August 2017: 0.20 times).

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

16. mAnAGement eXPenSe rAtiO (“mer”)

MER for the financial period from 1 March 2018 to 31 August 2018 is 0.58% (financial period from 1 March 2017 to 31 August 2017: 0.58%).

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.

17. trAnSACtiOnS WitH LiCenSeD FinAnCiAL inStitUtiOnS

transaction value

Percentage of total

rm %

AmBank (M) Berhad 11,147,654 46.8 CIMB Bank Berhad 4,983,290 20.9 Hong Leong Investment Bank Berhad 3,100,212 13.0 Alliance Bank Malaysia Berhad 3,097,549 13.0 Kenanga Investment Bank Berhad* 1,494,924 6.3

23,823,629 100.0

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

The above transaction values are in respect of unlisted corporate bonds and unlisted commercial papers. Transactions in unlisted corporate bonds and unlisted commercial papers do 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.


18. SeGmentAL rePOrtinG

a. Business segments

In accordance with the objective of the Fund, the Fund can invest 70% to 98% in fixed income instruments. The following table provides an analysis of the Fund’s revenue, results, assets and liabilities by business segments:

Unlisted fixed

income instruments

Other investments total

rm rm rm

1.3.2018 to 31.8.2018revenueSegment income 149,333 258,013 407,346 Unallocated expenditure (66,744)Income before tax 340,602 Income tax -Net income after tax 340,602

31.8.2018AssetsFinancial assets at FVTPL 10,728,019 -Short term deposits - 12,865,000 Other segment asset - 16,618 Total segment assets 10,728,019 12,881,618 23,609,637 Unallocated assets 15,978

23,625,615

LiabilitiesSegment liabilities 2,491,986 - 2,491,986 Unallocated liabilities 33,978

2,525,964


18. SeGmentAL rePOrtinG (COntD.)

a. Business segments (contd.)

Unlisted fixed

income instruments

Other investments total

rm rm rm

1.3.2017 to 31.8.2017revenueSegment income 153,318 178,468 331,786 Unallocated expenditure (58,145)Income before tax 273,641 Income tax - Net income after tax 273,641

31.8.2017AssetsFinancial assets at FVTPL 4,278,090 - Short term deposits - 13,890,000 Other segment asset - 43,443 Total segment assets 4,278,090 13,933,443 18,211,533 Unallocated assets 4,361

18,215,894

LiabilitiesUnallocated liabilities 24,060

b. Geographical segments

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

19. 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.


19. FinAnCiAL inStrUmentS (COntD.)

a. Classification of financial instruments (contd.)

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.

Financial assets at

FVtPL receivablesFinancial liabilities total

rm rm rm rm

31.8.2018AssetsUnlisted corporate

bonds 3,052,307 - - 3,052,307 Unlisted

commercial papers 7,675,712 - - 7,675,712

Short term deposits - 12,865,000 - 12,865,000 Other receivable - 16,618 - 16,618 Cash at bank - 15,978 - 15,978

10,728,019 12,897,596 - 23,625,615

LiabilityAmount due to

Manager - - 8,701 8,701 Amount due to

Trustee - - 348 348 Amount due to

licensed financial institutions - - 2,491,986 2,491,986

- - 2,501,035 2,501,035

31.8.2017AssetsUnlisted corporate

bonds 3,084,194 - - 3,084,194 Unlisted

commercial papers 1,193,896 - - 1,193,896

Short term deposits - 13,890,000 - 13,890,000 Other receivable - 43,443 - 43,443 Cash at bank - 4,361 - 4,361

4,278,090 13,937,804 - 18,215,894

LiabilityAmount due to

Manager - - 7,758 7,758 Amount due to

Trustee - - 310 310 - - 8,068 8,068


19. 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 fair values of these financial assets were determined using prices in active markets.

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

Level 1 Level 2 Level 3 totalrm rm rm rm

investments:31.8.2018Unlisted corporate

bonds - 3,052,307 - 3,052,307 Commercial papers - 7,675,712 - 7,675,712

31.8.2017Unlisted corporate

bonds - 3,084,194 - 3,084,194 Commercial papers - 1,193,896 - 1,193,896

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 unlisted corporate bonds and unlisted commercial papers are based on average of bid prices provided by financial institutions 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.

20. 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 periods.

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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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