Quarterly Report November 2018

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Quarterly Report

November 2018

For the Period Ended 30 November 2018

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Q U A R T E R L Y R E P O R T N O V E M B E R 2 0 1 8

ARECA PROGRESSIVE INCOME FUND 2.0

Contents

CORPORATE DIRECTORY 2

MANAGER’S REPORT

Fund Information, Performance & Review 3

Market Review & Outlook 7

TRUSTEE’S REPORT 9

STATEMENT BY THE MANAGER 9

UNAUDITED FINANCIAL STATEMENTS FOR

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QUARTERLY REPORT NOVEMBER 2018

C O R P O R A T E D I R E C T O R Y

MANAGER

Areca Capital Sdn Bhd (740840-D)

107, Blok B, Pusat Dagangan Phileo Damansara 1 No. 9, Jalan 16/11, Off Jalan Damansara 46350 Petaling Jaya, Selangor

Tel: 603-7956 3111, Fax: 603-7955 4111 website: www.arecacapital.com

e-mail: [email protected]

BOARD OF DIRECTORS Wong Teck Meng (Executive)

Edward Iskandar Toh Bin Abdullah (Executive) Raja Datuk Zaharaton Bt Raja Dato’ Zainal Abidin (Independent)

Dr. Junid Saham (Independent)

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

Dr. Junid Saham (Independent)

TRUSTEE

RHB Trustees Berhad (573019-U) Level 11, Tower 1, RHB Centre Jalan Tun Razak

50400 Kuala Lumpur

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

AUDITOR

Deloitte PLT (LLP0010145-LCA) Level 16, Menara LGB

1 Jalan Wan Kadir, Taman Tun Dr. Ismail 60000 Kuala Lumpur

Tel: 03-7610 8888, Fax: 03-7726 8986

TAX ADVISER

Deloitte Tax Services Sdn Bhd (36421-T) Level 16, Menara LGB

1 Jalan Wan Kadir, Taman Tun Dr. Ismail 60000 Kuala Lumpur

Tel: 03-7610 8888, Fax: 03-7726 8986

M A N A G E R ’ S O F F I C E A N D B R A N C H E S

HEAD OFFICE

107, Blok B, Pusat Dagangan Phileo Damansara 1, No. 9, Jalan 16/11, Off Jalan Damansara, 46350 Petaling Jaya, Selangor.

Tel: 603-7956 3111, Fax: 603-7955 4111 website: www.arecacapital.com e-mail: [email protected]

PENANG BRANCH IPOH BRANCH MALACCA BRANCH 368-2-02 Belissa Row 11A, (First Floor) 95A, Jalan Melaka Raya 24 Jalan Burma, Georgetown Persiaran Greentown 5 Taman Melaka Raya 10350 Pulau Pinang Greentown Business Centre 75000 Melaka Tel : 604-210 2011 30450 Ipoh, Perak Tel : 606-282 9111 Fax: 604-210 2013 Tel : 605-249 6697 Fax: 606-283 9112

Fax: 605-249 6696

KUCHING BRANCH 1st Floor, Sublot 3 Lot7998, Block 16 KCLD, Cha Yi Goldland Jalan Tun Jugah/ Stutong 93350 Kuching, Sarawak Tel: 6082-572 472

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ARECA PROGRESSIVE INCOME FUND 2.0

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F U N D I N F O R M A T I O N Name of the Fund Areca Progressive Income Fund 2.0

Fund Category/ Type

Wholesale Fund with flexible asset allocation / Income & Growth

Objective of the Fund

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

Performance

Benchmark

Maybank’s 12-month fixed deposit rate

Distribution Policy of the Fund

Subject to availability of distributable income, the Fund will distribute income at least once a year.

Profile of unitholdings

* excluding units held by the Manager (please refer to Notes to Financial Statement – Note 4) As at 30 November 2018 Size of Holding (Units) No. of accounts % No. of unit held (million) % Up to 5,000 - - - - 5,001 to 10,000 - - - - 10,001 to 50,000 12 19.67 0.60 1.34 50,001 to 500,000 36 59.02 7.18 16.06 500,001 and above 13 21.31 36.94 82.60 Total* 61 100.00 44.72 100.00

Rebates & Soft Commissions

The Manager retains soft commissions received from stockbrokers, provided these are of demonstrable benefit to unitholders. The soft commissions may take the form of goods and services such as, data and quotation services, computer software incidental to the management of the Fund and investment related publications. Cash rebates (if any) are directed to the account of the Fund. During the period under review, the Manager had not received any soft commissions.

Inception Date 23 August 2018

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

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

Financial Year End

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

23.8.2018 to 30.11.2018 Total Net Asset Value (“NAV”)

Total Net Asset Value (RM million) 45.8

Units in circulation (million units) 45

NAV per unit (RM) 1.0178

HIGHEST & LOWEST NAV per unit

Please refer to Note 1 for further information on NAV and pricing policy

Highest NAV per unit (RM) 1.0178

Lowest NAV per unit (RM) 1.0000

ASSET ALLOCATION % of NAV

Unlisted fixed income securities

Preference shares 98.25

Cash & cash equivalent including placements & repo 1.75

DISTRIBUTION

There was no distribution declared for the financial period under review

UNIT SPLITS

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

EXPENSE/ TURNOVER

Management expense ratio (MER) (%) 0.53

Please refer to Note 2 for further information

Portfolio turnover ratio (PTR) (times) 0.56

TOTAL RETURN

Total Return (%) 1.78

- Capital Return (%) 1.78

- Income Return (%) -

Annual Total Return (%) 7.33*

Performance Benchmark: Average Maybank’s 12-month fixed

deposit rate 3.41* *Annualised for comparison purpose only

Total Return since launch (%) 1.78

1-yr 3-yrs 5-yrs

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NOTES:

Note 1: Selling of units by the Management Company (i.e. when you purchase units and invests in the Fund)

and redemption of units by the Management Company (i.e. when you redeem your units and liquidate your investments) will be carried out at NAV per unit (the actual value of a unit). The entry/ exit fee (if any) would be computed separately based on your net investment/ liquidation amount.

Note 2: MER is calculated based on the total fees and expenses incurred by the Fund, divided by the average

net asset value calculated on a daily basis.

Note 3: PTR is computed based on the average of the total acquisitions and total disposals of the investment

securities of the Fund, divided by the average net asset value calculated on a daily basis.

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

distributions (if any) at NAV. The total return and the performance benchmark are sourced from Lipper.

Unit prices and distributions payable, if any, may go down as well as up. Past performance of the Fund is not an indication of its future performance.

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F U N D R E V I E W

The NAV per unit of the Fund was RM1.0178 as at 30 November 2018. For the quarter ending 30 November 2018, the Fund posted an annualised return of 7.33% against the benchmark Maybank’s 12 mths FD of 3.41%. This highly concentrated and focused fund outperformed the benchmark as domestic interest rates conditions remain low, stable and accommodative.

The Fund has achieved its objective of providing its investors a combination of income and capital growth for the period under review.

Investment Policy and Strategy

Despite challenging environment of the property sector, the credit quality of the sole issue in the portfolio remains strong and has sufficient security coverage. The assigned properties as security have a gross sales value of at least 1.5x the amount raised. In addition, the Fund is also supported by the corporate (LBS Bina Group Bhd) and personal guarantees of the principal shareholder. We are confident of the going concern of the issuer and their ability to fulfill all its financial obligation to the fund. We continue to monitor their credit quality regularly and rigorously.

NAV per unit as at 30 November 2018 _RM1.0178

Asset Allocation / Portfolio Composition 30.11.2018

Unlisted fixed income securities 98.25% Cash & cash equivalents 1.75%

Performance of Areca Progressive Income Fund 2.0 for the financial period since inception to 30 November 2018

98.25% 1.75%

Areca Progressive Income Fund 2.0

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MANAGER’S REPORT

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M A R K E T R E V I E W & O U T L O O K E C O N O M I C R E V I E W & O U T L O O K

US 3Q2018 GDP grew at 3.0% y-o-y, highest since 2Q2015 and a strong 3.5% q-o-q; below last quarter’s 4.2% which was then the highest since 3Q 2014. Unemployment data continue to sparkle with November maintaining the 49-year low of 3.7% while participation rate was at a respectable 62.9%. Inflation slid to its lowest since February at 2.2%, declining from a six year high in July at 2.9%. Crucially, core inflation remains above 2% at 2.2% with 12-months moving average at 2.1%. The Federal Reserve raised Fed Funds rates once in September through 2 meetings this quarter as expected to 2.25%, the third hike this year with one more penned in by end of the year.

The US-China trade war ‘officially’ kicked-off in the 3rd_{quarter of the year with an initial US$34 bil of}

China imports imposed with tariffs. A 10% tax was then put on another US$200 bill worth of China imports in September which will rise to 25% at year’s end. China retaliated with their list of equivalent value initially but they have a shorter stick to match. However, trade imbalance for first ten months of the year has not improved and has ironically widened to -US$344.5 bil; 11.3% higher than the same period last year. Trump’s frustration has all but boiled over with him ranting against Federal Reserve Chairman who predictably raised rates and in effect the USD$ strength, which in part negates the intended impact of the tariffs.

Meantime growth in China continue to taper down with 3Q GDP recording 6.5%, the lowest since early 2009. They have defied the US by addressing their domestic issues with fiscal expansions of widening tax deductions and increased infrastructure spending. Aided by a 1% cut to Reserve Ratio in October (the 4th_{cut this year), releasing almost US$110 billion into their system, they have directed}

banks to grow SME loans while attempting to steer GDP towards increased domestic consumption. The RMB, together with most currencies, have weakened further this quarter to close at 6.96, almost 7.0% lower than a year ago. This is evident in the strengthening of the USD index by 5.8% up till the end of November.

Apart from the distractions of Brexit, the ECB has maintained their interest rates policy and continue to wind down their bond buying program. They remain confident that the supportive monetary policy will be necessary to sustain the momentum until at least the middle of next year.

Following the relatively strong 1Q growth of 5.4% for Malaysia, 2Q and 3Q disappointed with 4.5% and 4.4% respectively, the latter being the lowest since 3Q2016. The 2019 National Budget announced was gentler than they prepared us for. GDP was revised down from 5% to 4.8% while maintaining fiscal discipline of 3.7%. The concern is that the budget was built on the projection that Brent crude trades at US$70 per barrel. It closed this period 12% lower than at the end of 2017 at US$58.70. Foreign Reserves has remained quite steady at USD102.0 billion (or RM422.8 billion) at the end of November against end August’s USD104.4 billion (or RM422.5 bil). And finally, due the ‘tax holiday’ with ‘zero’ rating of GST and return of subsidised petrol prices, inflation remains a 3½-year low at 0.2% in November.

FIXED INCOME MARKET REVIEW & OUTLOOK

In this 3-month period from September to November, the 10-year US Treasury benchmark traded up from 2.86% to hit this year’s high at 3.23% in a bullish move reflecting the Fed Reserve’s hawkish stance but eased off swiftly below 3% at period’s close as global growth turned bearish. Interestingly, the 2-10 year spread stayed narrow at 21 basis points at end of November after it hit an 11-year low of 18 basis points in August, signaling doubt to sustainability of growth. Historically, most recessions have been preceded by yields inversions. As the spreads remain thin, it may indicate the impending end of rate hike cycle. Traders have priced in one more hike for 2018 and 2 in 2019.

There were 2 Overnight Policy rate meetings in Malaysia this period with the OPR left unchanged at 3.25%. Bank Negara Malaysia recognises the increased downside risk to momentum of global growth due in part to ongoing US-China trade tensions and resulting weaker external demand. BNM remains

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MANAGER’S REPORT

confident that domestic consumption will continue to support our growth while wary of monetary policy normalisation of advanced economies which may lead to further capital outflows.

With general weakness in global capital markets, emerging markets continue to see withdrawals. Although foreign outflows from domestic sovereign market has somewhat abated, in this 3 months, Malaysia still saw an outflow of RM1.35 bil. Year to date net outflow stands at –RM17.8. Currently, foreign investors hold RM172.8 bil of our domestic sovereign debt or 23.4% of total outstanding issues. The decline can largely be attributed to US rates normalisation and their strong growth outlook with some tentative consideration to our new government and rating agencies’ perception of their capability in facing challenging economic and financial times.

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T R U S T E E ’ S R E P O R T

For The Financial Period 23 August 2018 (Date of Launch) to 30 November 2018

To the Unitholders of Areca Progressive Income Fund 2.0

We have acted as Trustee for Areca Progressive Income Fund 2.0 (“the Fund”) for the financial period from 23 August 2018 (date of launch) to 30 November 2018. In our opinion and to the best of our knowledge, Areca Capital Sdn Bhd (“the Manager”) has operated and managed the Fund in accordance with the following:-

(a) limitations imposed on the investment powers of the Manager and the Trustee under the Deed, the Securities Commission Malaysia’s Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework, the Capital Markets and Services Act 2007 and other applicable laws;

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

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

For and on behalf of

RHB TRUSTEES BERHAD (Company No: 573019-U)

MOHD SOFIAN BIN KAMARUDDIN LEE YIT CHENG

VICE PRESIDENT HEAD, GROUP INT’L OPS SUPPORT & TRUSTEE OPS

Kuala Lumpur, Malaysia 29 January 2019

STATEMENT BY THE MANAGER

To the Unitholders of Areca Progressive Income Fund 2.0

We, WONG TECK MENG and EDWARD ISKANDAR TOH BIN ABDULLAH, two of the Directors of the Manager, Areca Capital Sdn Bhd, do hereby state that in the opinion of the Manager, the accompanying financial statements are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the Securities Commission Malaysia’s Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework in Malaysia so as to give a true and fair view of the financial position of the Fund as of 30 November 2018 and the financial performance and the cash flows of the Fund for the financial period 23 August 2018 (date of launch) to 30 November 2018.

For and on behalf of the Manager Areca Capital Sdn Bhd

WONG TECK MENG EDWARD ISKANDAR TOH BIN ABDULLAH

CEO/ EXECUTIVE DIRECTOR

Kuala Lumpur 29 January 2019

CIO/ EXECUTIVE DIRECTOR

Kuala Lumpur 29 January 2019

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UNAUDITED STATEMENT OF FINANCIAL POSITION

As At 30 November 2018

Note RM

Assets

Investment

Unlisted fixed income securities 3 45,000,000

Other Assets

Interest receivables 995,634

Short-term deposits with investment bank 948,126

Cash at bank 350

Total Other Assets 1,944,110

Total Assets 46,944,110

Unitholders’Fund and Liability

Liabilities

Advanced interest 1,068,750

Accrued management fee 75,063

Total Liabilities 1,143,813

Unitholders’ Fund

Unitholders’ capital 45,001,363

Retained earnings 798,934

Net Asset Value Attributable to Unitholders 45,800,297

Total Unitholders’ Fund and Liability 46,944,110

Number of Units in Circulation 45,000,000

Net Asset Value Per Unit 5 1.0178

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UNAUDITED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Note RM

Investment Income

Interest income 14,906

Dividend income 995,548

Total Investment Income 1,010,454

Expenditure

Management fee 6 211,480

Other expenses 40

Total Expenditure 211,520

Net Income Before Tax 798,934

Income Tax Expense 9 -

Net Income After Tax/Total Comprehensive Income

For The Financial Period 798,934

Net Income After Tax Is Made Up Of:

Realised gain 798,934

UNAUDITED STATEMENT OF CHANGES IN NET ASSET VALUE

Unitholders’ capital

Retained earnings

Total net asset value RM RM RM As at 23 August 2018 (date of launch) - - -

Amount received from units created 45,001,363 - 45,001,363

Total comprehensive income for the

financial period - 798,934

798,934

As at 30 November 2018 45,001,363 798,934 45,800,297

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UNAUDITED STATEMENT OF CASH FLOWS

RM Cash Flows Used In Operating Activities

Interest received 16,183

Purchase of investment (45,000,000)

Management fee paid (136,417)

Payment for other expenses (40)

Net Cash Used In Operating Activities (45,120,274)

Cash Flows From Financing Activities

Cash proceeds from units created 46,068,750

Net Cash From Financing Activities 46,068,750

Net Increase In Cash And Cash Equivalents 948,476

Cash And Cash Equivalents At Date of Launch -

Cash And Cash Equivalents At End of Period 948,476

Cash and cash equivalents consist of the following amounts:

RM

Short-term deposits with investment bank 948,126

Cash at bank 350

948,476

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NOTES TO THE FINANCIAL STATEMENTS 1 GENERAL INFORMATION

Areca Progressive Income Fund 2.0 (“the Fund”) was established pursuant to the Trust Deed dated 20 August 2018 (“the Deed”) between Areca Capital Sdn Bhd as the Manager, RHB Trustees Berhad as the Trustee and all the registered unit holders of the Fund.

The principal activity of the Fund is to invest in investments as defined under Schedule 7 of the Deed, which include securities listed on Bursa Malaysia Securities Berhad or any other permitted foreign stock exchanges, unlisted securities, debentures, collective investment schemes, preference shares, fixed income related structured products, derivatives, deposits with financial institutions and other forms of investments as may be agreed upon by the Manager and the Trustee from time to time. The Fund commenced operations on 23 August 2018 and will continue its operations until terminated by the Trustee in accordance with Part 11 of the Deed.

The objective of the Fund is to provide investors a combination of income and capital growth. Any material changes to the Fund’s objective would require unit holder’s approval.

The Manager of the Fund is Areca Capital Sdn Bhd, a company incorporated in Malaysia. Its principal activities are managing private and unit trust funds.

2 BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

The financial statements of the Fund have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards (“IFRSs”) and Securities Commission Malaysia’s Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework in Malaysia.

3 INVESTMENT

RM At aggregate cost

Unlisted fixed income securities 45,000,000 At market value

Unlisted fixed income securities 45,000,000

Details of the unlisted fixed income securities as of 30 November 2018 are as follows:

Issuer (rating) maturity/ coupon (%) Nominal Value Valuation Price Aggregate Cost Carrying Value Fair Value Fair Value as a % of Net Asset Value RM RM RM RM RM % PREFERENCE SHARES Utuh Sejagat Sdn Bhd (NR) 2019/9.5 45,000,000 1.00 45,000,000 45,000,000 45,000,000 98.25

4 UNITS HELD BY THE MANAGER

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

No. of units RM

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The directors of the Manager are of the opinion that the transactions with the related parties have been entered into in the normal course of business and have been established on terms and conditions that are not materially different from that obtainable in transactions with unrelated parties.

5 NET ASSET VALUE PER UNIT

The net asset value per unit is calculated by dividing the net asset value attributable to unitholders as of 30 November 2018 of RM45,800,297 by units in issue as of 30 November 2018 of 45,000,000 units.

6 MANAGEMENT FEE

The Schedule 8 of the Deed provides that the Manager is entitled to an annual management fee at a rate not exceeding 2.00% per annum computed daily on the net asset value of the Fund before the deduction of the management fee and Trustee’s fee for the relevant day. The management fee is subject to 6% goods and services tax (“GST”) effective 1 April 2015 until 31 May 2018. The Management fee is not subject to any taxes from 1 June 2018 until 30 November 2018.

7 TRUSTEE’S FEE BORNE BY THE MANAGER

The Schedule 9 of the Deed provides that the Trustee is entitled to an annual Trustee’s fee at rate not exceeding 0.07% per annum computed daily on the net asset value of the Fund before the deduction of the management fee and Trustee’s fee for the relevant day. The Trustee’s fee is subject to 6% goods and services tax (“GST”) effective 1 April 2015 until 31 May 2018. The Trustee’s fee is not subject to any taxes from 1 June 2018 until 30 November 2018.

There is no Trustee’s fee provided for in the financial statements for the financial period as the fee was borne by the Manager.

8 EXPENSES BORNE BY THE MANAGER

There are no audit fee and tax agent’s fee provided for in the financial statements for the financial period as the fees were borne by the Manager.

9 INCOME TAX EXPENSE

There is no income tax expense for the period as interest income and dividend income derived by the Fund are exempted income from tax pursuant to Paragraph 35 and 35A of Schedule 6; and 12B Schedule 6 of the Income Tax Act, 1967.

10 MANAGEMENT EXPENSE RATIO AND PORTFOLIO TURNOVER Management Expense Ratio (MER)

Management expense ratio for the Fund is 0.53% for the financial period from 23 August 2018 (date of launch) to 30 November 2018. The management expense ratio which includes management fee, Trustee’s feeand other expenses, is calculated as follows:

MER = (A + B + C + D + E) ÷ F x 100

A = Management fee

B = Other expenses

F = Average net asset value of Fund

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Portfolio Turnover Ratio (PTR)

The portfolio turnover ratio for the Fund is 0.56 times for the financial period from 23 August 2018 (date of launch) to 30 November 2018. The portfolio turnover ratio is derived from the following calculation:

(Total acquisition for the financial period + total disposal for financial the period) ÷ 2 Average net asset value of the Fund for the financial period calculated on a daily basis Where: total acquisition for the financial period = RM45,000,000

total disposal for the financial period = NIL

11 TRADE WITH BROKERS/DEALERS

Details of transactions with brokers/dealers are as follows:

Brokers/Dealers Value of Trades % of Total Trades RM %

Hong Leong Investment Bank Berhad 32,510,000 96.81 KAF Investment Bank Berhad 1,070,000 3.19 33,580,000 100.00

Included in transactions with brokers/dealers are trades conducted on normal terms in relation to money market instruments.

12 RISK MANAGEMENT POLICIES

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Fund seeks to preserve capital as well as to provide investors with medium to long term capital growth by investing in securities that have potential for capital growth. In order to meet its stated investment objectives, the Fund utilises risk management for both defensive and proactive purposes. Rigorous analysis of sources of risk in the portfolio is carried out and the following policies are implemented to provide effective ways to reduce future risk and enhance future returns within the Fund’s mandate.

The key risks faced by the Fund are credit risk, liquidity risk, market risk (including price risk) and capital risk.

Categories of Financial Instruments

RM Financial assets

Loans and receivables:

Unlisted fixed income securities 45,000,000 Interest receivables 995,634 Short-term deposits with investment bank 948,126

Cash at bank 350

Financial liability Other financial liability:

Advanced interest 1,068,750

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Credit risk management

Credit risk is the risk that the counterparty to a financial instrument will cause a financial loss for the Fund by failing to discharge an obligation. The Fund is exposed to the risk of credit-related losses that can occur as a result of a counterparty or issuer being unable or unwilling to honour its contractual obligations to make timely repayments of interest, principal and proceeds from realisation of investments.

The Manager manages the Fund’s credit risk by undertaking credit evaluation and close monitoring of any changes to the issuer/counterparty’s credit profile to minimise such risk. It is the Fund’s policy to enter into financial instruments with reputable counterparties.

The Fund’s maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the statement of financial position. None of the Fund’s financial assets were past due or impaired as of 30 November 2018.

The credit risk for cash at bank is considered negligible, since the counterparties are reputable banks with high quality external ratings.

Liquidity risk management

This risk is defined as the ease with which a security can be sold at or near its fair value depending on the volume traded on the market. The Fund manages its liquidity risk by maintaining a sufficient level of liquid assets to meet anticipated payments and cancellations by unit holders. The liquid assets comprise cash at bank and short-term deposits which are capable of being converted into cash within 7 days.

The table below summarises the maturity profile of the Fund’s liabilities at the reporting date based on contractual undiscounted repayment obligations:

Up to 1 month 1 - 3 months 3 months to 1 year Total RM RM RM RM Financial liability: Non-interest bearing Advanced interest - 1,068,750 - 1,068,750

Accrued management fee 75,063 - - 75,063

Market risk management

This is a class of risk that inherently exists in an economy and cannot be avoided by any business or fund. It is usually due to changes in market variables such as interest rates and markets prices. This risk cannot be removed from an investment portfolio, which is solely invested within that particular market, by diversification.

During the current financial period, as the Fund invests only in Malaysian unlisted securities, the performance of the Fund might go up or down in accordance with the prevailing market risk of Malaysia.

Price risk management

Price risk is the risk of unfavourable changes in the value of unlisted securities as the result of changes in the levels of the equity indices. The price risk exposure arises from the Fund’s investment in unlisted securities. The Manager manages the risk of unfavourable changes in prices by continuous monitoring of the performance and risk profile of the investment portfolio.

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Capital risk management

The capital of the Fund is represented by equity consisting of unitholders’ capital and retained earnings. The amount of equity can change significantly on a daily basis as the Fund is subject to daily subscriptions and redemptions at the discretion of unitholders. The Fund’s objective when managing capital is to safeguard the Fund’s ability to continue as a going concern in order to provide returns for unitholders and benefits for other stakeholders and to maintain a strong capital base to support the development of the investment activities of the Fund.

13 COMPARATIVE FIGURES

The financial statements are drawn up for the financial period 23 August 2018 (date of launch) to 30 November 2018. As the financial statements are drawn up for the first time, no comparative figures are presented.

14 QUARTERLY ACCOUNTS

The quarterly accounts for the period ended 30 November 2018 have not been audited.

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Kuching Branch

1st Floor, Sublot 3 Lot 7998, Block16 KCLD, Cha Yi Goldland Jalan Tun Jugah / Stutong 93350 Kuching, Sarawak