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Annual Report June 2016

For the Year Ended 30 June 2016

Areca Steady fixedINCOME Fund

A NN UA L REPORT J UN E 2016

ARECA Steady fixedINCOME FUND

Contents

CORPORATE DIRECTORY 2

MANAGER’S REPORT

Fund Information, Performance & Review 3

Market Review & Outlook 8

TRUSTEE’S REPORT 11

STATEMENT BY MANAGER 11

AUDITORS’ REPORT 12

AUDITED FINANCIAL STATEMENTS FOR

Areca Steady fixedINCOME Fund 13

ANNUAL REPORT JUNE 2016


2

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

Dato’ Wee Hoe Soon @ Gooi Hoe Soon

(Independent, Chairman)

Wong Teck Meng (Executive)

Raja Datuk Zaharaton Bt Raja Dato’ Zainal Abidin

(Non-Executive Non-Independent)

Dr. Junid Saham (Independent)

INVESTMENT COMMITTEE MEMBERS

Dato’ Wee Hoe Soon @ Gooi Hoe Soon

(Independent, Chairman)

Raja Datuk Zaharaton Bt Raja Dato’ Zainal Abidin

(Non-Independent)

Dr. Junid Saham (Independent)

TRUSTEE

RHB Trustees Berhad (573019-U)

10th Floor, Plaza OSK,

Jalan Ampang,

50450 Kuala Lumpur

Tel: 03-9207 7778 Fax: 03-2175 3223

AUDITOR

PricewaterhouseCoopers (AF1146)

Level 10, 1 Sentral, Jalan Rakyat,

Kuala Lumpur, Sentral, P O Box 10192

Tel: 03-2173 1188, Fax: 03-2173 1288

TAX ADVISER

PricewaterhouseCoopers Taxation Services

Sdn Bhd (464731-M) Level 10, 1 Sentral, Jalan Rakyat, Kuala Lumpur, Sentral, P O Box 10192

Tel: 03-2173 1188, Fax: 03-2173 1288

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 – PULAU TIKUS PERAK – IPOH MALACCA

368-2-02 Belissa Row

Jalan Burma, Georgetown

10350 Pulau Pinang

Tel : 604-210 2011

Fax: 604-210 2013

11A, (First Floor)

Persiaran Greentown 5

Greentown Business Centre

30450 Ipoh, Perak

Tel : 605-249 6697/6698

Fax: 605-249 6696

95A, Jalan Melaka Raya 24

Taman Melaka Raya

75000 Melaka

Tel : 606-282 9111

Fax: 606-283 9112

mailto:[email protected]

mailto:[email protected]



3

F U N D I N F O R M A T I O N

Name of the Fund Areca Steady fixedINCOME Fund

Fund Category/

Type

Fixed Income (Wholesale Fund)/Income

Objective of the

Fund

To provide sophisticated investors with a stable stream of consistent income

while maintaining capital stability by investing in fixed income investments

with medium to long term investment horizon.

Benchmark Maybank’s 12-month fixed deposit rate

Distribution Policy

of the Fund

Yearly or more frequent, subject to availability of the distributable income.

In the absence of instructions to the contrary from a Unit Holder, the

Manager is entitled to reinvest the income distributed from the Fund in

additional units of that Fund at the NAV per unit at the end of the

distribution day with no entry fee.

Profile of

unitholdings

* excluding units held

by the Manager

As at 30 June 2016

Size of Holding

(Units)

No. of

accounts %

No. of

units held

‘million

%

Up to 5,000 - - - -

5,001 to 10,000 - - - -

10,001 to 50,000 - - - -

50,001 to 500,000 21 51.22 4.34 14.95

500,001 and above 20 48.78 24.68 85.05

Total* 41 100.00 29.02 100.00

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 year under review, the Manager had not

received any soft commissions.

Inception Date 11 May 2009

Initial Offer Price RM1.0000 per unit during the initial offer period of 21 days ended 31 May

2009

Pricing Policy

Single Pricing – Selling and repurchase of units by Manager are at Net Asset

Value per unit

Financial year end 30 June



4

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

2016 2015 2014

Net Asset Value (“NAV”) as at 30 June

Total Net Asset Value (RM million) 34.19* 33.17* 37.69*

Units in circulation (million units) 32.48* 31.24* 34.96*

NAV per unit (RM) 1.0527* 1.0616* 1.0782*

* Ex-Distribution

HIGHEST & LOWEST NAV for the year ended 30 June Please refer to Note 1 for further information on NAV and

pricing policy

Highest NAV per unit (RM) 1.0826* 1.1116* 1.1003* Lowest NAV per unit (RM) 1.0525* 1.0616* 1.0781*

* Ex-Distribution

ASSET ALLOCATION % of NAV as at 30 June

Fixed Income Securities

Collective investment scheme 15.88 - -

Quoted securities-local 0.91 1.36 1.79

Unquoted bonds-local 81.48 83.61 78.97

Unquoted bonds-foreign - 8.50 10.38

Floating rate negotiable instrument of

deposit (FRIND) - 6.09 5.39

Cash & cash equivalents including placements

and repo 1.67

0.44 3.47

DISTRIBUTION Please refer to Note 2 for further information

Distribution dates 31 Dec 2015

29 Jun 2016

30 Dec 2014

29 Jun 2015

27 Dec 2013

27 Jun 2014

Gross distribution (sen per unit) 2.00 (31 Dec)

3.00 (29 Jun)

1.00 (30 Dec)

5.00 (29 Jun)

2.00 (27 Dec)

2.00 (27 Jun)

Net distribution (sen per unit) 2.00 (31 Dec)

3.00 (29 Jun)

1.00 (30 Dec)

5.00 (29 Jun)

2.00 (27 Dec)

2.00 (27 Jun)

NAV before distribution (RM per unit) 1.0816 (30 Dec)

1.0826 (28 Jun)

1.0887 (29 Dec)

1.0790 (26 Jun)

1.1003 (26 Dec)

1.0983 (26 Jun)

NAV after distribution (RM per unit) 1.0624 (31 Dec)

1.0525 (29 Jun)

1.1116 (30 Dec)

1.0621 (29 Jun)

1.0803 (27 Dec)

1.0781 (27 Jun)

UNIT SPLITS

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

EXPENSE/ TURNOVER for the year ended 30 June

Management expense ratio (MER) (%)

Please refer to Note 3 for further information

1.36 1.32 1.29

Portfolio turnover ratio (PTR) (times)


0.33 0.34 0.31



5

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

2016 2015 2014

TOTAL RETURN for the year ended 30 June


Total Return (%) 3.91 4.05 2.78

- Capital Return (%) (0.84) (1.54) (0.93)

- Income Return (%) 4.75 5.59 3.71

2016 2015 2014 2013 2012

Annual Total Return (%) 3.91 4.05 2.78 3.91 5.40

Benchmark: Average Maybank's 12-month fixed deposit rate

3.30 3.27 3.17 3.17 3.17

1-yr 3-yrs 5-yrs

Average Total Return per annum (%) 3.91 3.71 4.34

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: Distribution of 2.00 sen per unit and 3.00 sen per unit were declared on 31 December 2015 and 29

June 2016 respectively, and were automatically reinvested into additional units on the same day at NAV per

unit after distribution at no entry fee.

Note 3: 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 4: 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 5: Fund performance figures are calculated based on NAV to NAV and assume reinvestment of

distributions (if any) at NAV. The total return is sourced from Lipper. Benchmark data is sourced from

Malayan Banking Berhad.

Past performance is not necessarily indicative of future performance. Unit prices and investment

returns may go down, as well as up.



6

F U N D R E V I E W

The Fund’s NAV per unit decreased from RM1.0616 as at 30 June 2015 to RM1.0527 as at 30 June

2016, after a total net distribution of 5 sen per unit during the year. For the year ended 30 June

2016, the Fund posted a return of 3.91% against the benchmark Maybank’s 12-month fixed

deposit rate of 3.30% p.a. The Fund outperformed its benchmark for the period under review as

the corporate bonds held enjoyed a stable and accommodative monetary policy despite a difficult

end of 3Q 2015 and an uncertain start of 2016.

The Fund is fully invested with exposure to 19 issues in a varied spread of sectors. The largest

sector exposure remains the banking / finance (31.0%). The average modified duration in 2.47

years. We are also invested in a high yield bond collective investment scheme since Q2 2016 as well as a small 0.9% exposure in loan stock.

The Fund achieved its objective in providing stable stream of consistent income while maintaining

capital stability for the year under review. We will remain highly invested with an intention to raise

the duration.

Investment Policy and Strategy

The Fund primarily invests in a diversified portfolio of fixed income investments with intention to

hold until maturity. The Fund focuses mainly on quality debentures with maturity of 3 to 7 years

with small exposure to other maturity periods.

NAV per unit as at 30 June 2016 RM1.0527

Movement of asset allocation as a percentage of Net Asset Value

for the year ended 30 June 2016

Asset Allocation / Portfolio Composition as at 30 June 2016 2015 2014

Collective investment scheme 15.88% - -

Quoted securities-local 0.91% 1.36% 1.79% 1.79% - -

Unquoted bonds-local 81.48% 83.61% 78.97% 78.97% 88.61% 88.61%

Unquoted bonds-foreign - 8.50% 10.38% 10.38% 8.84% 8.84%

Floating rate negotiable

instrument of deposit

-

6.09%

5.39%

5.39%

-

-

Cash & cash equivalents 1.67% 0.44% 3.47% 3.47% 2.55% 2.55%

For the year ending June 2016, the Manager invested in collective investment scheme to diversify

the portfolio. The Manager also took advantage of the strong SGD by taking profit in the foreign

bond while the FRNID structured product matured.

1.67%

96.25% 90.36%

81.87%

98.33%

0%

20%

40%

60%

80%

100%

30-Sep-15 31-Dec-15 31-Mar-16 30-Jun-16

Bonds & other fixed income instruments

Cash and cash equivalents

* as a % of net asset value

81.48%

15.88% 1.67%

0.91%



7

F U N D R E V I E W

Top 5 Holdings by Issuers:

As at 30 Sep 2015 (%)

As at 31 Dec 2015 (%)

1) Alpha Circle 19.50


2) Hong Leong Bank 13.75


3) Genting Singapore 8.91

3) CIMB Bank 7.15

4) CIMB Bank 6.78

4) Eastern & Oriental 6.81


5) Jati Cakerawala 6.28

As at 31 Mar 2016 (%)

As at 30 Jun 2016 (%)





3) CIMB Bank 6.88





5) AMMB Holdings 5.90

Performance of Areca Steady fixedINCOME Fund

for the financial period since inception to 30 June 2016

Areca Steady fixedINCOME

Maybank 12 Months Fixed Deposit Rate



8

MARKET REVIEW & OUTLOOK

ECONOMIC REVIEW

We highlight a few milestones of this period of July 2015 to June 2016 under review. Leading towards

the end of last year was the first United States (US) rate hike in more than 9 years (including 7 years

of zero interest rates policy). After waiting with bated breath what seemed like eternity it finally

happened in mid December 2015. Unemployment trended down and recorded 5% for the last three months of the year. It has continued to fall since then to stand at 4.90% at the end of June 2016.

Inflation at 1%, still a distance from long term objective, shows signs of a turnaround. Consumer

sentiment and housing data point to an upward trajectory as confidence in the economy grew,

justifying this quarter percent rise in Federal Fund rate.

However, following this upbeat global outlook set forth after the rate hike, markets took an

unexpected volatile turn at the start of 2016.

The now-suspended circuit breaker installed to help limit volatility in China’s stock market

inadvertently became the catalyst for the opposite. Lower manufacturing and growth data provided

further fuel. As the bell rang for the start of the year, a quick 5% drop tripped the first 15 minute suspension. Upon reopening, a surge of selling broke the -7% level and caused a trading halt for the

day within minutes. 3 days later, following Bank of China’s Yuan devaluation, their stock market

swiftly hit -7% suspension mark again. The downward spiral continued till the end of the month

culminating in a 22% decline at one point over 2015 close. The Dow Jones was not spared losing 11%

at one point but recovered to -5.5% for the month. Kuala Lumpur Stock Exchange (KLSE) tracked the

global stock markets slide losing 5.4% at its worst, hitting a four month low. Naturally, Brent crude

oil price’s corresponding fall from USD38 per barrel to USD28 in the same time frame in January was

attributed some blame for these indices decline.

Continued improvements in the US labour and housing data began to drag global sentiment upwards

in Q2 2016 although constant media focus on China’s declining growth, growing debt to Gross

Domestic Product (GDP) and worrying banking sector mitigated. Despite China’s growth of 6.9%,

6.8%, 6.7% and 6.7% y-o-y for the last 4 quarters surpasses that of the US’s 2.2%, 1.9%, 1.6% and

1.2%, it is; ironically; widely blamed for the commodities and global demand slowdown.

In Europe, inflation struggled to breach into positive last year only to slide back into negative most

of 2016. Unemployment optimistically trended down falling below 9% the first time in more than 6

years to close this period at 8.6%. The European Central Bank (ECB) had in March expanded its

quantitative easing policy by increasing the €60bil monthly bond buying program to €80bil a month. Moving towards the end of Q2, attention turned to the United Kingdom (UK). The ‘Brexit’ referendum

carried out in June brought about a surprising result. Economically the UK forms barely 4% of global

GDP. Trade with Malaysia is a mere 1.1%. Hence her exit’s (though may be long drawn; over 2 years)

impact may be minimal.

Amidst all these, global monetary policies have remained largely accommodative with several nations

adopting Zero Rates Policy or even Negative Rates Policy. Japan went deeper into negative while the

ECB dropped to zero. Australia, India, Taiwan and South Korea also cut rates in this period. Among

our neighbours; Philippines and Indonesia followed suit while Singapore abandoned ‘gradual appreciation’ from their foreign exchange policy. China reduced benchmark rates twice in 2H2016

from 4.85% to 4.35% placing the US as the only major economy to have raised rates in the last 12

months.

Malaysia’s economy

Malaysia’s GDP growth eased further with 4.7%, 4.5% and 4.2% for Q3 2015 till Q1 2016.

Noteworthy is our unspectacular year on year export data which apart from moderating, have fallen

into negative twice in this period in review. International Reserves however remains healthy falling slightly from RM398.1 bil to RM390.4 bil. At the same time, MYR depreciated 5.5% against USD from

3.78 to 3.99 due to a combination of factors ranging from diminishing positive yield carry as US rates

rose, falling oil prices (from USD64 per barrel to below USD30 before recovering to USD50 this year)



9

and the negative effects of 1 Malaysia Development Berhad (1MDB). The reserves are sufficient to

finance 8.1 months of retained imports and is equal to 1.2 times of short term external debt.

Inflation reached a peak of 4.2% in this period before falling to 1.6% in June 2016 as Goods and

Services Tax (GST) effect wears off.

Statutory Reserve Ratio was cut in January to ease liquidity tightness as Bank Negara saw some risks to growth developing. We also witnessed the changing of guard in Bank Negara Governor in May this

year. Datuk Muhammad Ibrahim, with a long standing career as a central banker, took over the helm

from the retiring Tan Sri Dr Zeti Akhtar Aziz, thus ensuring continuity of stable supportive policies.

Malaysia also revised her budget in January tracking the decline of oil price at that time which was

circa USD35 per barrel. Hence, it augurs well for Malaysia’s fiscal position with price trading 30%

higher currently.

FIXED INCOME MARKET REVIEW

The period under review saw the issuance of RM94.0 bil Malaysian Government Securities (MGS)/

Government Investment Issues (GII) through 30 tenders vs RM88.5 bil in the previous period

(July ’14 – June ’15). There was only one tender for Skim Perumahan Kerajaan bonds of RM0.5 bil.

Interestingly, foreigners who rushed out our shores last year began trickling back. Foreign holdings of

our sovereign debt stood at RM220.1 billion (34.2% of total issued) at the end of June 2016

compared to RM199.3 billion last June. The drop in holdings of discounted short term instruments

from RM22.7 bil to RM16.2 bil was more than made up by the spike in long term bonds held from

RM203.9 bil. Meanwhile, total Private Debt Securities (PDS) issued for this 12 mth period ending June 2016 amounted to RM99.7 bil. Foreign interest is only RM15.1 bil or 2.9% of total PDS outstanding

including quasi-government issues.

During this period, there were 6 Overnight Policy Rate (OPR) meetings where the benchmark rate

was left unchanged at 3.25% in an environment of deteriorating global growth environment with the

exception of the US.

Malaysian sovereign yield curve shifted up in 2H 2015 in line with tightness in liquidity before falling

between 16 and 28 bps in 1H 2016 as funds returned with slowing global economy and easy

monetary policies. PDS curves also shifted up before recovering to last year June’s level. Constant Maturity Conventional Yield-To-Maturity: June 2016 vs June 2015

Tenure 1Y 3Y 5Y 7Y 10Y

Jun’15 Jun’16 Jun’15 Jun’16 Jun’15 Jun'16 Jun’15 Jun’16 Jun’15 Jun’16

MGS 3.039 2.774 3.312 3.173 3.564 3.317 3.918 3.593 4.008 3.726

AAA 3.830 3.930 4.080 4.100 4.270 4.230 4.430 4.380 4.610 4.580

AA2 4.060 4.200 4.370 4.470 4.590 4.620 4.780 4.620 4.970 4.950

A2 5.760 5.580 6.450 6.330 6.930 6.800 7.340 7.240 7.940 7.860

Source: Bond Pricing Agency Malaysia Sdn Bhd (BPA)



10

ECONOMIC OUTLOOK

Tiptoeing into the second half of this year, mixed feelings engulf us. Fresh off ‘Brexit’, the Unied Kingdom (UK) will have to renegotiate trade deals and arrangements with the European Union (EU)

and the world at large. Bilateral trade’s agreements may come back in vogue and even benefit the

Brits in contrast to en bloc trade agreements. The US elections may throw up some surprises as well

or at least its build up may make for an interesting and scary script.

In the meantime, the US economy will likely continue along on its path to full recovery. However,

with the impact of ‘Brexit’ yet to be fully understood and realised and global growth still tripping over,

the resurgence will be mitigated.

Some concern may also arise from China’s banking sector in which her shadow banking run parallel and in stealth. Their aggregate asset quality may return to haunt. The need to shift to a more

consumption based economy has become greater.

Oil may have found a sweet range of USD40-50 per barrel for now as concerns of oversupply fade.

Some recovery of soft commodities’ prices have also been encouraging but overcapacity overhang

still lingers.

FIXED INCOME MARKET OUTLOOK

As for interest rates outlook, with the US the only major power to be relatively upbeat on its economy,

it is unlikely that an aggressive rate hike will ensue in an increasing connected and co- dependent

world of business. If any, there may just be one rate hike towards the latter half of the year. As for

(European Central Bank) ECB and Japan, their quantitative easing policies have ensured low to

negative rates to prevail into next year. China however has ample room to reduce rates.

As for Malaysia, interest rates differential over the US and Singapore yields provide for some rate

cuts opportunities. If need be, we may have up to 50 bps to cut this year for our Overnight Policy

Rates while our Statutory Reserve Rate have the potential of one more cut following the surprise move in January.



11

T R U S T E E ’ S R E P O R T

For The Financial Year Ended 30 June 2016

To the Unit holders of Areca Steady fixedINCOME Fund

We have acted as Trustee of Areca Steady fixedINCOME Fund (the “Fund”) for the financial year

ended 30 June 2016. 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 Deed and any regulatory

requirements;

(c) creation and cancellation of units are carried out in accordance with the Deed and other

regulatory requirements; and

(d) the distributions of 5.00 sen (gross) per unit to the unitholders during the financial year

ended 30 June 2016 are consistent with the objectives of the Fund.

For and on behalf of the Trustee

RHB TRUSTEES BERHAD (Company No:573019-U)

TONY CHIENG SIONG UNG

DIRECTOR

Kuala Lumpur

23 August 2016

S T A T E M E N T B Y T H E M A N A G E R

To the Unit holders of Areca Steady fixedINCOME Fund

We, Wong Teck Meng and Dato’ Wee Hoe Soon @ Gooi Hoe Soon, two of the Directors of Areca

Capital Sdn Bhd, do hereby state that in our opinion as the Manager, the financial statements set

out on pages 13 to 38 are drawn up in accordance with the provisions of the Deed and give a true

and fair view of the financial position of the Fund as at 30 June 2016 and of its results, changes in

net assets attributable to unitholders and cash flows of the Fund for the financial year ended 30

June 2016 in accordance with the Malaysian Financial Reporting Standards and International

Financial Reporting Standards.

For and on behalf of the Manager,

ARECA CAPITAL SDN BHD

WONG TECK MENG

EXECUTIVE DIRECTOR

DATO’ WEE HOE SOON @ GOOI HOE SOON

INDEPENDENT DIRECTOR

Kuala Lumpur

23 August 2016



12

INDEPENDENT AUDITORS’ REPORT TO THE UNIT HOLDERS OF ARECA STEADY FIXEDINCOME FUND

REPORT ON THE FINANCIAL STATEMENTS

We have audited the financial statements of Areca Steady fixedINCOME Fund, which comprise the

statement of financial position as at 30 June 2016, and the statement of comprehensive income,

statement of changes in equity and statement of cash flows for the financial year then ended, and

a summary of significant accounting policies and other explanatory notes, as set out on pages 13

to 38.

Manager’s and Trustee’s Responsibility for the Financial Statements

The Manager is responsible for the preparation of financial statements that gives a true and fair

view in accordance with Malaysian Financial Reporting Standards and International Financial

Reporting Standards. The Manager is also responsible for such internal control as the Manager

determines are necessary to enable the preparation of financial statements that are free from

material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We

conducted our audit in accordance with approved standards on auditing in Malaysia. Those

standards require that we comply with ethical requirements and plan and perform the audit to

obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and

disclosures in the financial statements. The procedures selected depend on our judgment,

including the assessment of risks of material misstatement of the financial statements, whether

due to fraud or error. In making those risk assessments, we consider internal control relevant to

the Fund’s preparation of financial statements that give a true and fair view in order to design

audit procedures that are appropriate in the circumstances, but not for the purpose of expressing

an opinion on the effectiveness of the Manager’s internal control. An audit also includes evaluating

the appropriateness of accounting policies used and the reasonableness of accounting estimates

made by the Manager as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a

basis for our audit opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the

Fund as of 30 June 2016 and of its financial performance and cash flows for the year then ended in

accordance with Malaysian Financial Reporting Standards and International Financial Reporting

Standards.

OTHER MATTERS

This report is made solely to the unit holders of the Fund and for no other purpose. We do not

assume responsibility to any other person for the content of this report.

PRICEWATERHOUSECOOPERS

(No. AF: 1146)

Chartered Accountants

Kuala Lumpur

23 August 2016



13

STATEMENT OF FINANCIAL POSITION

As At 30 June 2016

30.6.2016 30.6.2015

Note RM RM

Current Assets

Financial assets at fair value through

profit or loss 8 33,597,645 33,022,346

Cash & cash equivalents 9 638,454 190,828

Total Assets 34,236,099 33,213,174

Current Liabilities

Accrued management fee 29,469 36,016

Other payables and accruals 10 14,870 11,766

Total Liabilities 44,339 47,782

Net Asset Value of the Fund 34,191,760 33,165,392

Equity

Unitholders’ capital 32,935,583 31,630,862

Retained earnings 1,256,177 1,534,530

Total Net Assets Attributable to

UnitHolders 34,191,760 33,165,392

Number of Units in Circulation 11 32,480,447 31,239,485

Net Asset Value Per Unit (Ex-Distribution) 1.0527 1.0616

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



14

STATEMENT OF COMPREHENSIVE INCOME


30.6.2016 30.6.2015

Note RM RM

Investment Income

Interest income 3 1,638,394 1,667,019

Net gain on financial assets at fair value

through profit or loss 8 78,908 126,683

1,717,302 1,803,702

Expenses

Management fee 4 400,436 432,253

Trustee's fee 5 - -

Audit fee 8,760 7,738

Tax agent’s fee 3,600 4,696

Other expenses 33,939 4,787

446,735 449,474

Profit Before Taxation 1,270,567 1,354,228

Taxation 6 3,070 -

Net Profit After Taxation And Total Comprehensive Income For The Financial

Year

1,267,497 1,354,228

Net Profit After Taxation Is Made Up As Follows:

Realised amount 1,704,067 1,362,408

Unrealised amount (436,570) (8,180)

1,267,497 1,354,228




15

STATEMENT OF CHANGES IN EQUITY


Note

Unit

holders’

capital

Retained

earnings Total net

asset value

RM RM RM

Balance as at 1 July 2015 31,630,862 1,534,530 33,165,392

Movement in unit holders’ capital:

Creation of units arising from applications 1,889,669 - 1,889,669

Creation of units arising from distributions 1,545,850 - 1,545,850

Cancellation of units (2,140,798) - (2,140,798)

Distributions 7 - (1,545,850) (1,545,850)

Total comprehensive income for the

financial year - 1,267,497 1,267,497

Balance as at 30 June 2016 32,665,583 1,256,177 34,191,760

Balance as at 1 July 2014 35,726,030 1,970,633 37,696,663

Movement in unit holders’ capital:

Creation of units arising from applications - - -

Creation of units arising from distributions 1,790,331 - 1,790,331

Cancellation of units (5,885,499) - (5,885,499)

Distributions 7 - (1,790,331) (1,790,331)

Total comprehensive income for the

financial year - 1,354,228 1,354,228

Balance as at 30 June 2015 31,630,862 1,534,530 33,165,392




16

STATEMENT OF CASH FLOWS For The Financial Year Ended 30 June 2016

30.6.2016 30.6.2015

Note RM RM

Cash Flows From Operating Activities

Proceeds from disposal of investments 10,745,032 13,552,384

Purchase of investments (11,332,479) (10,092,321)

Interest received from deposits with licensed

financial institutions 88,328 49,743

Interest received from unquoted fixed income

securities 1,641,124 1,661,112

Exit fee from cancellation of units - -

Management fee paid (406,984) (435,073)

Payment for other fees and expenses (43,196) (16,555)

Tax paid (3,070) -

Net cash flows generated from operating activities 688,755 4,719,290

Cash Flows From Financing Activities

Cash proceeds from creation of units 3,445,519 1,790,331

Payments for cancellation of units (2,140,798) (6,031,992)

Distribution paid (1,545,850) (1,790,331)

Net cash flows used in financing activities (241,129) (6,031,992)

Net increase in cash and cash equivalents 447,626 (1,312,702)

Cash and cash equivalents at the beginning of

the financial year

190,828

1,503,530

Cash and cash equivalents at the end of

the financial year 638,454 190,828

Cash and cash equivalents comprise:

Deposit with a licensed financial institution 9 613,660 181,362

Bank balance with a licensed bank 9 24,794 9,466

638,454 190,828




17

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2016

The following accounting policies have been used consistently in dealing with items which are

considered material in relation to the financial statements.

A BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements have been prepared under the historical cost convention in accordance

with the Malaysian Financial Reporting Standards (“MFRS”) and International Financial Reporting

Standards (“IFRS”).

The preparation of financial statements in conformity with the MFRS and IFRS requires the use of

certain critical accounting estimates and assumptions that affect the reported amounts of assets

and liabilities and disclosure of contingent assets and liabilities at the date of the financial

statements, and the reported amounts of revenues and expenses during the reported financial

year. It also requires the Manager to exercise their judgment in the process of applying the Fund’s accounting policies. Although these estimates and judgment are based on the Manager’s best

knowledge of current events and actions, actual results may differ.

The areas involving a higher degree of judgment or complexity, or areas where assumptions and

estimates are significant to the financial statements are disclosed in Note M.

The new standards and amendments to published standards and interpretations to existing

standards that are applicable to the Fund but not yet effective and have not been early adopted

are as follows: (a) Financial year beginning on/after 1 July 2016

Amendments to MFRS 11 ‘Joint arrangements’ (effective from 1 January 2016)

requires an investor to apply the principles of MFRS 3 ‘Business Combination’

when it acquires an interest in a joint operation that constitutes a business. The

amendments are applicable to both the acquisition of the initial interest in a

joint operation and the acquisition of additional interest in the same joint

operation. However, a previously held interest is not re-measured when the

acquisition of an additional interest in the same joint operation results in

retaining joint control.

The Fund will apply these amendments when effective. These amendments are

not expected to have a significant impact on the Fund’s financial statements.

Amendments to MFRS 116 ‘Property, plant and equipment’ and MFRS 138

‘Intangible assets’ (effective from 1 January 2016) clarify that the use of

revenue-based methods to calculate the depreciation of an item of property,

plant and equipment is not appropriate. This is because revenue generated by

an activity that includes the use of an asset generally reflects factors other than

the consumption of the economic benefits embodied in the asset.

MFRS 138 also clarify that revenue is generally presumed to be an inappropriate

basis for measuring the consumption of the economic benefits embodied in an

intangible asset. This presumption can be overcome only in the limited

circumstances where the intangible asset is expressed as a measure of revenue

or where it can be demonstrated that revenue and the consumption of the

economic benefits of the intangible asset are highly correlated.

The Fund will apply these amendments when effective. These amendments are not expected to have a significant impact on the Fund’s financial statements.

(b) Financial year beginning on/after 1 July 2017

MFRS 107 ‘Statement of Cash Flows – Disclosure Initiative’ (effective from 1

January 2017) introduce an additional disclosure on changes in liabilities arising

from financing activities.



18

The Fund will apply these amendments when effective. These amendments are

not expected to have a significant impact on the Fund’s financial statements.

MFRS 112 ‘Income Taxes - Recognition of Deferred Tax Assets for Unrealised

Losses’ (effective from 1 January 2017) clarify the requirements for recognising

deferred tax assets on unrealised losses arising from deductible temporary

difference on asset carried at fair value.

In addition, in evaluating whether an entity will have sufficient taxable profits in

future periods against which deductible temporary differences can be utilised,

the amendments require an entity to compare the deductible temporary

differences with future taxable profits that excludes tax deductions resulting

from the reversal of those temporary differences.

The amendments shall be applied retrospectively.

The Fund will apply these amendments when effective. These amendments are not expected to have a significant impact on the Fund’s financial statements.

(c) Financial year beginning on/after 1 July 2018

MFRS 9 ‘Financial Instruments’ (effective from 1 January 2018) will replace

MFRS 139 ‘Financial Instruments: Recognition and Measurement’.

MFRS 9 retains but simplifies the mixed measurement model in MFRS 139 and

establishes three primary measurement categories for financial assets:

amortised cost, fair value through profit or loss and fair value through other

comprehensive income ("OCI"). The basis of classification depends on the entity's business model and the cash flow characteristics of the financial asset.

Investments in equity instruments are always measured at fair value through

profit or loss with an irrevocable option at inception to present changes in fair

value in OCI (provided the instrument is not held for trading). A debt instrument

is measured at amortised cost only if the entity is holding it to collect

contractual cash flows and the cash flows represent principal and interest.

For liabilities, the standard retains most of the MFRS 139 requirements. These

include amortised cost accounting for most financial liabilities, with bifurcation of embedded derivatives. The main change is that, in cases where the fair value

option is taken for financial liabilities, the part of a fair value change due to an

entity’s own credit risk is recorded in other comprehensive income rather than

the income statement, unless this creates an accounting mismatch.

MFRS 9 introduces an expected credit loss model on impairment that replaces

the incurred loss impairment model used in MFRS 139. The expected credit loss

model is forward-looking and eliminates the need for a trigger event to have

occurred before credit losses are recognised.

The Fund will apply this standard when effective. This standard is not expected

to have a significant impact on the Fund’s financial statements.

• MFRS 15 ‘Revenue from contracts with customers’ (effective from 1 January

2018) replaces MFRS 118 ‘Revenue’ and MFRS 111 ‘Construction contracts’ and

related interpretations. The standard deals with revenue recognition and

establishes principles for reporting useful information to users of financial

statements about the nature, amount, timing and uncertainty of revenue and

cash flows arising from an entity’s contracts with customers.



19

Revenue is recognised when a customer obtains control of a good or service and

thus has the ability to direct the use and obtain the benefits from the good or

service. The core principle in MFRS 15 is that an entity recognises revenue to

depict the transfer of promised goods or services to the customer in an amount

that reflects the consideration to which the entity expects to be entitled in

exchange for those goods or services.



(d) Financial year beginning on/after 1 July 2019

MFRS 16 ‘Leases’ (effective from 1 January 2019) supersedes MFRS 117 ‘Leases’

and the related interpretations.

Under MFRS 16, a lease is a contract (or part of a contract) that conveys the

right to control the use of an identified asset for a period of time in exchange for

consideration.

MFRS 16 eliminates the classification of leases by the lessee as either finance

leases (on balance sheet) or operating leases (off balance sheet). MFRS 16

requires a lessee to recognise a “right-of-use” of the underlying asset and a

lease liability reflecting future lease payments for most leases.

The right-of-use asset is depreciated in accordance with the principle in MFRS

116 ‘Property, Plant and Equipment’ and the lease liability is accreted over time

with interest expense recognised in the income statement.

For lessors, MFRS 16 retains most of the requirements in MFRS 117. Lessors continue to classify all leases as either operating leases or finance leases and

account for them differently.



B INCOME RECOGNITION

Interest income from short-term deposits and unquoted fixed income securities are recognised

on an accrual basis using the effective interest method.

For unquoted fixed income securities, realised gains and losses on sale of investments are

accounted for as the difference between the net disposal proceeds and the carrying amount of

investments, determined on cost adjusted for accretion of discount or amortisation of premium

on investments.

C TAXATION

Current tax expense is determined according to the Malaysian tax laws and includes all taxes

based upon the taxable profits earned during the financial year.

D PRESENTATION AND FUNCTIONAL CURRENCY

Items included in 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, which is the Fund’s presentation and

functional currency.

E FOREIGN CURRENCY TRANSLATION

Foreign currency transactions in the Fund are accounted for at exchange rates prevailing at the

transaction dates. Foreign currency monetary assets and liabilities are translated at exchange

rates prevailing as at the date of the statement of financial position. Exchange differences



20

arising from the settlement of foreign currency transactions and from the translation of foreign

currency monetary assets and liabilities are included in the statement of comprehensive income.

Translation differences on non-monetary financial assets such as foreign collective investment

schemes classified as financial assets at fair value through profit and loss are included in the

statement of comprehensive income as part of the fair value gain or loss.

The principal closing rate used in the translation of foreign currency is as follows:

30.6.2016 30.6.2015

Foreign Currency

RM RM

1 Singapore Dollar - 2.8025

F FINANCIAL ASSETS AND FINANCIAL LIABILITIES

i) Classification

The Fund designates its investment in unquoted fixed income securities as financial assets

at fair value through profit or loss at inception.

Financial assets are designated at fair value through profit or loss when they are managed

and their performance evaluated on a fair value basis.

Loans and receivables are non-derivative financial assets with fixed or determinable

payments that are not quoted in an active market and have been included in current assets.

The Fund’s loans and receivables comprise cash and cash equivalents and amount due from

Manager which are all due within 12 months.

Financial liabilities are classified according to the substance of the contractual arrangements

entered into and the definitions of a financial liability.

The Fund’s financial liabilities which include amount due to Manager, accrued management

fee and other payables and accaccruals.

ii) Recognition and measurement

Regular purchases and sales of financial assets are recognised on the trade-date, the date

on which the Fund commits to purchase or sell the asset. Investments are initially

recognised at fair value. Transaction costs are expensed in the statement of comprehensive

income.

Financial assets are derecognised when the rights to receive cash flows from the

investments have expired or have been transferred and the Fund has transferred

substantially all risks and rewards of ownership.

Financial liabilities, within the scope of MFRS 139, 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.

Financial liability is derecognised when the obligation under the liability is extinguished. Gain

and losses are recognised in the statement of comprehensive income when the liabilities are

derecognised, and through the amortisation process.

Foreign exchange gains and losses on the derivative financial instrument are recognised in

statement of comprehensive income when settled or at date of the statement of financial

position at which time they are included in the measurement of the derivative financial

instrument.

Unrealised gains or losses arising from changes in the fair value of the ‘financial assets at

fair value through profit of loss’ are presented in the statement of comprehensive income

within ‘net gain/(loss) on financial assets at fair value through profit and loss’ in the period

in which they arise. Any unrealised gains however are not distributable.



21

Unquoted fixed income securities are revalued on a daily basis based on fair value prices

quoted by a bond pricing agency (“BPA”) registered with the Securities Commission as per

the Securities Commission Guidelines on Unit Trust Funds. Refer to Note M for further

explanation.

Dividend income from financial assets at fair value through profit of loss is recognised in the

statement of comprehensive income as part of gross dividend income when the Fund’s right

to receive payments is established.

Quoted securities in Malaysia are valued at the last done market price quoted on the Bursa

Securities Berhad (“Bursa Securities”) at the date of the statement of financial position.

Deposits with licensed financial institutions are stated at cost plus accrued interest

calculated on the effective interest method over the period from the date of placement to

the date of maturity of the respective deposits. Loan and receivables and other financial liabilities are subsequently carried at amortised

cost using the effective interest method.

For assets carried at amortised cost, the Fund assesses at the end of the reporting period

whether there is objective evidence that a financial asset or group of financial assets is

impaired. A financial asset or a group of financial assets is impaired and impairment losses

are incurred only if there is objective evidence of impairment as a result of one or more

events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss

event (or events) has an impact on the estimated future cash flows of the financial asset or

group of financial assets that can be reliably estimated.

The amount of the loss is measured as the difference between the asset’s carrying amount

and the present value of estimated future cash flows (excluding future credit losses that

have not been incurred) discounted at the financial asset’s original effective interest rate.

The asset’s carrying amount of the asset is reduced and the amount of the loss is recognised

in statement of comprehensive income. If ‘loan and receivables’ or a ‘held-to-maturity

investment’ has a variable interest rate, the discount rate for measuring any impairment

loss is the current effective interest rate determined under the contract.

As a practical expedient, the Fund may measure impairment on the basis of an instrument’s

fair value using an observable market price.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease

can be related objectively to an event occurring after the impairment was recognised (such

as an improvement in the debtor’s credit rating), the reversal of the previously recognised

impairment loss is recognised in statement of comprehensive income.

When an asset is uncollectible, it is written off against the related allowance account. Such

assets are written off after all the necessary procedures have been completed and the

amount of the loss has been determined.

G CASH AND CASH EQUIVALENTS

For the purpose of statement of cash flows, cash and cash equivalents comprise cash and bank

balances and deposits held in highly liquid investments that are readily convertible to known

amounts of cash and which are subject to an insignificant risk of changes in value.

H CREATION AND CANCELLATION OF UNITS

The Fund issues cancellable units, which are cancelled at the unitholder’s option and are

classified as equity. Cancellable units can be returned to the Fund at any time for cash equal to

a proportionate share of the Fund’s net asset value (“NAV”). The outstanding units are carried

at the redemption amount that is payable at the statement of financial position date if the

unitholder exercises the right to return the unit to the Fund.



22

Units are created and cancelled at the unitholder’s option at prices based on the Fund’s NAV per

unit at the time of creation or cancellation. The Fund’s net asset value per unit is calculated by

dividing the net assets attributable to unitholders with the total number of outstanding units.

I UNITHOLDERS CAPITAL

The unitholders's contributors to the Fund meet the definition of puttable instruments classified

as equity instruments under the revised MFRS 132 "Financial Instruments: Presentation".

The units in the Fund are puttable instruments which entitle the unitholders to a pro-rata share

of the net asset value of the Fund. The units are subordinated and have identical features.

There is no contractual obligation to deliver cash or another financial asset other than the

obligation on the Fund to repurchase the units. The total expected cash flows from the units in

the Fund over the life of the units are based on the change in the net asset value of the Fund.

J DISTRIBUTION

A distribution to the Fund’s Unitholders is accounted for as a deduction from realised reserves.

A proposed distribution is recognised as a liability in the period in which it is approved.

K SEGMENTAL INFORMATION

A business segment is a group of assets and operations engaged in providing products or

services that are subject to risks and returns that are different from those of other business

segments. A geographic segment is engaged in providing products or services within a

particular economic environment that are subject to risks and return that are different from

those of segments operating in other economic environments.

Operating segments are reported in a manner consistent with the internal reporting used by the

chief operating decision-maker. The chief operating decision-maker, who is responsible for

allocating resources and assessing performance of the operating segments, has been identified

as the Investment Committee of the Fund’s manager that undertakes strategic decisions for the

Fund.

L FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments comprise financial assets and financial liabilities. Fair value is the amount

at which a financial asset could be exchanged or a financial liability settled, between

knowledgeable and willing parties in an arm’s length transaction. The information presented

herein represents the estimates of fair values as at the statement of financial position date.

M CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS IN APPLYING ACCOUNTING POLICIES

The Fund makes estimates and assumptions concerning the future. The resulting accounting

estimates will, by definition, rarely equal the related actual results. To enhance the information

content of the estimates, certain key variables that are anticipated to have material impact to

the Funds’ results and financial position are tested for sensitivity to changes in the underlying

parameters.

Estimates and judgments are continually evaluated by the Manager and the Trustee and are

based on historical experience and other factors, including expectations of future events that

are believed to be reasonable under the circumstances.

Estimate of fair value of unquoted fixed income securities

The Fund uses significant judgment in determining whether an investment is impaired. The

Fund evaluates, among other factors, the duration and extent to which the fair value of the

investment is less than cost, and the financial health and near-term business outlook for the

investee, including factors such as industry and sector performance, macroeconomic factors and

speculation.

In undertaking any of the Fund’s investment, the Manager will ensure that all assets of the

Fund under management will be valued appropriately, that is at fair value and in compliance

with the Securities Commission valuation guidelines.



23

Unquoted fixed income securities are valued using fair value prices quoted by a bond pricing

agency (BPA). Where the manager is of the view that the price quoted by BPA for a specific

bond differs from the market price by more than 20 basis points, the manager may use the

market price, provided that the manager records its basis for using a non-BPA price, obtains

necessary internal approvals to use the non-BPA price, and keeps an audit trail of all decisions

and basis for adopting the use of non-BPA price.

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR 30 JUNE 2016

1 THE FUND, THE MANAGER AND THEIR PRINCIPAL ACTIVITIES

Areca Steady fixedINCOME Fund (“the Fund”) is a wholesale fund that was formed under a

custodian structure on 11 May 2009. A trustee was later appointed for the Fund with the

signing of a Trust Deed dated 24 July 2009 as modified by the First Supplemental Deed dated

15 August 2013 (“the Deed”) between Areca Capital Sdn Bhd as the Manager, RHB Trustees

Berhad as the Trustee and all the registered unitholders of the Fund.

The principal activity of the Fund is to invest in investments as defined under Schedule 6 of

the Deed, which include money market instruments, fixed income securities and deposits with

financial institutions. The Fund commenced operations on 11 May 2009 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 sophisticated investors with a stable stream of

consistent income while maintaining capital stability by investing in fixed income investments

with medium to long term investment horizon.

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 FINANCIAL INSTRUMENT AND RISK MANAGEMENT OBJECTIVES AND POLICIES

The Fund seeks to provide sophisticated investors with a stable stream of consistent income

while maintaining capital stability by investing in fixed income investments with medium to

long term investment horizon. 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 Fund is exposed to a variety of risks which include market risk (including price risk and

interest rate risk and foreign exchange/currency risk), credit risk, liquidity risk, business risk

and capital risk.

Financial risk management is carried out through internal control processes adopted by the

Manager and adherence to the investment restrictions as stipulated Deed.

Financial instruments of the Fund as follows:

Note

Loan and

receivables

RM

Financial

assets at fair

value through

profit or loss

RM

Total

RM

30 June 2016

Collective investment scheme 8 - 5,428,878 5,428,878

Quoted securities 8 - 312,500 312,500 Unquoted fixed income securities 8 - 27,856,267 27,856,267

Cash & cash equivalents 9 638,454 - 638,454



24

Note

Loan and

receivables

RM

Financial

assets at fair

value through

profit or loss

RM

Total

RM

638,454 33,597,645 33,597,645

30 June 2015

Quoted securities 8 - 452,500 452,500

Unquoted fixed income securities 8 - 32,569,846 32,569,846

Cash & cash equivalents 9 190,828 - 190,828

190,828 33,022,346 33,213,174

All current liabilities are financial liabilities which are carried at amortised cost.

Market risk

(a) Price risk

Price risk arises mainly for uncertainty about future prices of investments. It represents

the potential loss the Fund might suffer through holding market positions in the face of

price movements. The Manager manages the risk of unfavourable changes in prices by

continuous monitoring of the performance and risk profile of the investment portfolio.

The Fund's overall exposure to price risk was as follows:

30.6.2016 30.6.2015

RM RM

Financial assets at fair value through profit or loss* 33,597,645 33,022,346

*Include interest receivable RM362,863 (2015: RM458,440)

The table below summarises the sensitivity of the Fund’s net asset value to movements

in prices of unquoted fixed income securities at the end of the reporting period. The

analysis is based on the assumptions that the price of the unquoted fixed income

securities fluctuates by 5% with all other variables held constant. This represents

management’s best estimate of a reasonable possible shift in the fair value through

profit and loss, having regard to the historical volatility of the prices.

% Change in price of

financial assets at fair

value through profit &

loss

30.6.2016

Market Value

30.6.2015

RM RM

+5% 34,896,521 34,650,541

-5% 31,573,043 31,394,151

Impact on profit after taxation/

net asset value

30.6.2016 30.6.2015

RM RM

+5% 1,661,739 1,628,195

-5% (1,661,739) (1,628,195)

(b) Interest rate risk



25

Cash flow interest rate risk is the risk that the future cash flows of a financial instrument

will fluctuate because of changes in market interest rates.

Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates.

In general, when interest rates rise, unquoted fixed income securities prices will tend to

fall and vice versa. Therefore, the NAV of the Fund may also tend to fall when interest

rates rise or are expected to rise. However, investors should be aware that should the

Fund holds an unquoted fixed income securities till maturity, such price fluctuations

would dissipate as it approaches maturity, and thus the growth of the NAV shall not be

affected at maturity. In order to mitigate interest rates exposure of the Fund, the

Manager will manage the duration of the portfolio via shorter or longer tenured assets

depending on the view of the future interest rate trend of the Manager, which is based on its continuous fundamental research and analysis.

This risk is crucial in a bond fund since bond portfolio management depends on

forecasting interest rate movements. Prices of bonds move inversely to interest rate

movements, therefore as interest rates rise, the prices of bonds decrease and vice versa.

Furthermore, bonds with longer maturity and lower yield coupon rates are more

susceptible to interest rate movements.

Investors should note that fixed income securities (such as the bonds held by the Fund)

and money market instruments are subject to interest rate fluctuations. Such

investments may be subject to unanticipated rise in interest rates which may impair the

ability of the issuers to make payments of interest and principal, especially if the issuers

are highly leveraged. An increase in interest rates may therefore increase the potential

for default by an issuer.

The Fund’s investments in deposits with licensed financial institutions are short term in

nature. Therefore, exposure to interest rate fluctuations is minimal.

The table below summarises the sensitivity of the Fund’s net asset value and profit after

tax to movements in interest rate of unquoted fixed income securities held by the Fund

at the end of each reporting year as a result of movement in interest rate. The analysis

is based on the assumptions that the interest rate increased by 5% and decreased by 5%

with all other variables held constant. This represents management’s best estimate of a

reasonable possible shift in the interest rate, having regard to the historical volatility of

the interest rate.

% Change in interest rate of

unquoted fixed income securities

Impact on profit after

taxation/change in net asset value

30.6.2016 30.6.2015

RM RM

+5% (392,485) (258,916)

-5% 409,771 261,876

(c) Currency risk

As the Fund may invest its assets in securities denominated in a wide range of

currencies other than Ringgit Malaysia, the net asset value of the Fund expressed in

Ringgit Malaysia may be affected favourably or unfavourably by exchange control

regulations or changes in the exchange rates between Ringgit Malaysia and such other

currencies. The risk is minimised through investing in a wide range of foreign currencies

denominated assets and thus, diversifying the risk of single currency exposure.

In the normal course of investment, the Manager will usually not hedge foreign currency

exposure. The Manager may however depending on prevailing market circumstances at



26

a particular point in time, choose to use forward, option contracts or other derivatives

for hedging and risk reduction purposes.

The following table sets out the foreign currency risk concentrations and counterparties

of the Fund.

Financial assets at fair value

through profit or loss

2016 2015

RM RM

Singapore - 2,818,751

The table summarises the sensitivity of the Fund’s financial assets to changes in foreign

exchange movements at the end of the reporting period. The analysis is based on the

assumption that the foreign exchange rate changes by 5% with all variables remain

constants. This represents management’s best estimate of a reasonable possible shift in

the foreign exchange rate having regard to historical volatility of this rate. An

increase/(decrease) in foreign exchange rate will result in a corresponding

increase/(decrease) in net assets attributable to unitholders by approximately 5%.

Change in foreign

exchange rate

Impact on profit

after taxation

Impact on net

asset value

% RM RM

At 30 June 2016

Singapore Dollar - - -

At 30 June 2015

Singapore Dollar 5 140,938 140,938

Credit risk

Credit risk refers to the ability of an issuer or counterparty to make timely payments of

interest, principals and proceeds from realisation of investment. The Manager manages the

credit risk by undertaking credit evaluation to minimise such risk.

Credit risk arising from placements on deposits in licensed financial institutions is managed

by ensuring that the Fund will only place deposits in reputable licensed financial institutions.

The settlement terms of the proceeds from the creation of units' receivable from the Manager

and redemption of units payable to the Manager are governed by the SC's Guidelines on

Unlisted Capital Market Products under the Lodge and Launch Framework.

Credit risk is a concern for unquoted fixed income securities. The risk arises when an issuer is

unable to service any profit/contractual coupon or repay the principal amount upon

redemption. In such cases, investors may suffer significant losses with respect to their capital

invested and income foregone. Management of the credit risk is largely accounted for by the

Fund’s management of issue-specific risk. This refers to the emphasis on credit analysis

conducted to determine issuers’ or guarantors’ ability to service promised payments.

The maximum exposure to credit risk before any credit enhancements is the carrying amount

of the financial assets is set out below:



27

Financial assets at

fair value through

profit or loss

RM

Cash and

Cash

Equivalents

RM

Total

RM

As at June 2016

Finance

AAA - 24,794 24,794

AA- - 613,660 613,660

Quoted securities 5,428,878 - 5,428,878

Quoted securities 312,500 - 312,500

Unquoted fixed income securities:

AAA 3,100,397 - 3,100,397

AA2/AA 1,859,406 - 1,859,406

AA3/AA- 16,551,539 - 16,551,539

A1/A+ 2,104,375 - 2,104,375

A2/A 1,015,325 - 1,015,325

Non-rated 3,225,225 - 3,225,225

33,597,645 638,454 34,236,099

As 30 June 2015

Finance

AAA - 190,828 190,828

Quoted securities 452,500 - 452,500

Unquoted fixed income securities:

AAA 1,072,596 - 1,072,596

AA1/AA+ 509,596 - 509,596

AA2/AA 4,183,342 - 4,183,342

AA3/AA- 17,639,732 - 17,639,732 A1/A+ 1,156,362 - 1,156,362

A2/A 1,025,792 - 1,025,792

Non-rated 6,982,066 - 6,982,066

33,022,346 190,828 33,213,174

The Manager considers the risk of material loss in the event of non-performance by the

counterparties of the Fund to be unlikely. All financial assets of the Fund at the end of the

financial year are neither past due nor impaired.

Liquidity risk

Liquidity risk is the risk that investments cannot be readily sold at or near its actual value

without taking a significant discount. This will result in lower NAV of the Fund. The Manager

manages this risk by maintaining sufficient level of liquid assets to meet anticipated payment

and cancellations of unit by unit holders, liquid assets comprise bank balance, deposit with a

licensed financial institution and other instruments, which are capable of being converted into

cash within 7 days.

The table below analyses the Fund's financial liabilities into relevant maturity groupings

based on the remaining period at the statement of financial position date to the contractual

maturity date. The amounts in the table below are the contractual undiscounted cash flows.



28

Less than

one

month

Between

one

month to

one year Total

RM RM RM

As at 30 June 2016

Accrued management fee 29,469 - 29,469

Other payables and accruals - 14,870 14,870

Contractual cash outflows 29,469 14,870 44,339

As at 30 June 2015

Accrued management fee 36,016 - 36,016

Other payables and accruals - 11,766 11,766

Contractual cash outflows 36,016 11,766 47,782

Business risk

Business risk of emerging companies with a short track record that tends to be higher than

matured and well-established companies. The Fund gives preference to invest in companies

with a reasonable track record compared to a new company.

The Manager can manage the market cycles and short-term fluctuations by virtue of its

experience, the analytical process adopted by its fund manager, and by constructing a

diversified investment portfolio.

Redemption and subscription of units are important in the day-to-day management of the

Fund. Liquidity is monitored everyday to ensure the Fund is not affected especially by

unexpected redemption.

The compliance unit is in place to ensure no breaches in investment limits. If there is any

breach, the compliance unit can quickly notify the Fund Manager to take corrective action.

In managing the Fund, the Manager has established policies and procedures outlining the

internal control mechanism, reporting responsibilities and internal audit and compliance

function.

The performance and investment activities of the Fund are regularly reviewed by the

Investment Committee and the Board of Directors of the Manager.

Country risk

When a Fund invests into foreign markets, the foreign investments portion may be affected

by risks specific to a country in which it invests in. Such risk includes changes in the

country’s economic fundamentals, social and political stability, currency movements and foreign investment policies. The factors may have impact on the prices of the Fund’s

investment in that country and consequently may also affect the Fund’s NAV and its growth.

For the Fund, country risk is managed through investing in securities in countries which are

well researched.

Capital risk

The capital of the Fund is represented by equity consisting of unit holders’ capital and

accumulated losses. 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 shareholders. 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 shareholders and benefits for other stakeholders

and to maintain a strong capital base to support the development of the investment activities

of the Fund.



29

Fair value estimation

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e.

an exit price).

The fair value of financial assets traded in active market (such as publicly traded derivatives

and trading securities) are based on quoted market prices at the close of trading on the year

end date. The Fund utilises the last traded market price for financial assets where the last

traded price falls within the bid-ask spread. In circumstances where the last traded price is not

within the bid-ask spread, the Fund Manager will determine the point within the bid-ask

spread that is representative of the fair value.

An active market is a market in which transactions for the asset take place with sufficient

frequency and volume to provide pricing information on an ongoing basis.

The fair value of financial assets that are not traded in an active market is determined by

using valuation techniques.

Fair value hierarchy

(i) The table below analyses financial instruments carried at fair value by valuation method. The different levels have been defined as follows:

Level 1: Quoted prices (unadjusted) in active market for identical assets or liabilities.

Level 2: Inputs other than quoted prices included within level 1 that are observable for

the asset or liability, either directly (that is, as prices) or indirectly (that is,

derived from prices).

Level 3: Inputs for the asset and liability that are not based on observable market data

(that is, unobservable inputs)

The level in the fair value hierarchy within which the fair value measurement is categorised in

its entirety is determined on the basis of the lowest level input that is significant to the fair

value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses

observable inputs that require significant adjustment based on unobservable inputs, that

measurement is a Level 3 measurement.

Assessing the significance of a particular input to the fair value measurement in its entirety

requires judgment, considering factors specific to the asset or liability.

The determination of what constitutes ‘observable’ requires significant judgment by the Fund.

The Fund considers observable data to be that market data that is readily available, regularly

distributed or updated, reliable and verifiable, not proprietary, and provided by independent

sources that are actively involved in the relevant market.

The following table analyses within the fair value hierarchy the Fund’s financial assets (by

class) measured at fair value:

Level 1 Level 2 Level 3 Total

RM RM RM RM

30 June 2016

Financial assets at fair value through profit or loss:

- collective investment scheme 5,428,878 - - 5,428,878

- quoted securities 312,500 - - 312,500

- unquoted fixed income securities - 27,856,267 - 27,856,267



30

Level 1 Level 2 Level 3 Total

RM RM RM RM

30 June 2015

Financial assets at fair value through

profit or loss:

- quoted securities 452,500 - - 452,500

- unquoted fixed income securities - 32,569,846 - 32,569,846

Investments whose values are based on quoted market prices in active markets, and are

therefore classified within Level 1, include active quoted securities. The Fund does not adjust

the quoted prices for these instruments. The Fund’s policies on valuation of these financial

assets are stated in Note F.

Financial instruments that trade in markets that are considered to be active but are valued

based on quoted market prices, dealer quotations or alternative pricing sources supported by

observable inputs are classified within Level 2 these include unquoted fixed income securities.

As Level 2 instruments include positions that are not traded in active markets and/or are

subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-

transferability, which are generally based on available market information. The Fund’s policies

on valuation of these financial assets are stated in Note F.

(ii) The carrying value of cash and cash equivalents and all current liabilities are a reasonable approximation of their fair values due to their short term nature.

3 INTEREST INCOME

2016 2015

RM RM

Interest income from:

- deposits with licensed financial institutions 88,328 49,743

- unquoted fixed income securities 1,550,066 1,627,276

1,638,394 1,677,019

4 MANAGEMENT FEE

The 7th Schedule of the Deed provides that the Manager is entitled to an annual management

fee at a rate not exceeding 2.50% 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 provided for in the financial statements amounted to 1.25% (2015:

1.25%) per annum for the year. The management fee is subjected to 6% Goods and Services

Tax ("GST") effective 1st April, 2015.

There will be no further liability to the Manager in respect of the management fee other than

the amounts recognised above.

5 TRUSTEE’S FEE

The 8th Schedule of the Deed provides that the Trustee is entitled to an annual Trustee’s fee

at a rate not exceeding 0.25% 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.

There is no Trustee’s fee provided for in the financial statements for the financial year as the

fee was borne by the Manager (2015: Nil). The trustee's fee is subjected to 6% Goods and

Services Tax ("GST") effective 1st April, 2015.

There will be no further liability to the Trustee in respect of the trustee fee other than the

amounts recognised above.



31

6 TAXATION

(a) Tax charge for the financial year

2015 2016

RM RM

Current taxation 3,070 -

(b) Numerical reconciliation of income tax expense

The numerical reconciliation between the net income before taxation multiplied by the

Malaysian statutory income tax rate and the tax expense of the Fund is as follows:

2016 2015

RM RM

Profit before taxation 1,270,567 1,354,228

Tax calculated at a tax rate of 24% (2015:25%) 304,936 338,557

Tax effects of:

- Income not subject to tax (399,261) (450,926)

- Expenses not deductible for tax expenses 9,009 13,075

- Restriction on tax deductible expense 88,386 99,294

Tax expense 3,070 -

7 DISTRIBUTION

Distribution to unit holders is from the following sources:

30.6.2016

RM

30.6.2015

RM

Interest income from deposits with licensed financial

institutions

88,159 49,727

Interest income from unquoted fixed income securities 1,163,036 1,173,355

Net realised gains on sale of investments 517,478 113,284

Previous year’s realised gains 228,982 903,439

1,995,655 2,239,805

Less: Expenses (446,735) (449,474)

Taxation (3,070) -

Net distribution amount 1,545,850 1,790,331

Distribution on 29 June 2016

Gross distribution per unit (cents) 3.00 -

Net distribution per unit (cents) 3.00 -

Distribution on 31 December 2015

Gross distribution per unit (cents) 2.00 -

Net distribution per unit (cents) 2.00 -

Distribution on 29 June 2015

Gross distribution per unit (cents) - 5.00

Net distribution per unit (cents) - 5.00

Distribution on 30 December 2014

Gross distribution per unit (cents) - 1.00

Net distribution per unit (cents) - 1.00

Gross distribution is derived using total income less total expenses.



32

Gross distribution per unit is derived from gross realised income less expenses divided by the

number of units in circulation, while net distribution per unit is derived from gross realised

income less expenses and taxation divided by the number of units in circulation.

8 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

30.6.2016 30.6.2015

RM RM

Designated at fair value through profit or loss

- Collective investment scheme 5,428,878 -

- Quoted investments 312,500 452,500

- Unquoted fixed income securities 27,856,267 32,569,846

33,597,645 33,022,346

Net gain on assets at fair value through profit or

loss:

-realised gain on disposals 515,478 134,863

-unrealised fair value loss (436,570) (8,180)

78,908 126,683

Financial assets at fair value through profit or loss as at 30 June 2016 are as follows:

Unquoted Fixed Income Securities

Nominal

value Name of Issuer Carrying

value

Fair value

as at

30.6.2016

Fair value

as at

30.6.2016

expressed as a

percentage of

value of the

Fund RM RM RM %

6,000,000 5.15% Alpha Circle Sdn Bhd

19/11/2019 AA- 6,036,403 6,073,003 17.76 3,000,000 8.25% Hong Leong Bank Berhad

09/09/2039 AA3 3,057,952 3,367,983 9.85

2,500,000 2.00% Eastern & Oriental

Berhad 06/03/2020 NR 2,089,390 2,216,248 6.48

2,000,000 4.66% Jati Cakerawala Sdn Bhd

31/07/2018 AA3 2,039,323 2,043,703 5.98

2,000,000 4.50% AMMB Holdings Berhad

08/08/2019 AA3 2,035,015 2,017,014 5.90

1,250,000 6.70% CIMB Bank Berhad

07/10/2038 AA 1,298,204 1,319,878 3.86 1,000,000 8.25% AmBank (M) Berhad

18/08/2039 A2

1,030,288 1,126,888 3.30

1,000,000 3.00% TRIplc Ventures Sdn Bhd

08/10/2021 AAA 1,012,117 1,069,457 3.13

1,000,000 5.60% CIMB Thai Bank Public

Company Limited 05/07/2024

AA3 1,027,003 1,039,573 3.04

1,000,000 4.90% Gulf Investment

Corporation G.S.C 03/08/2016 AAA 1,026,203 1,020,736 2.99

1,000,000 7.50% DRB-Hicom Berhad

28/12/2114 A 1,027,926 1,015,325 2.97



33

Nominal


value

Fair value

as at

30.6.2016

Fair value

as at

30.6.2016

expressed as a

percentage of

value of the

Fund RM RM RM %

1,000,000 5.50% Al Dzahab Assets Berhad

21,06,2021 AAA 1,001,508 1,010,177 2.95

1,000,000 4.40% Pengurusan Air SPV

Berhad 17/06/2026 NR 1,001,687 1,008,977 2.95

1,000,000 Sports Toto Malaysia Sdn Berhad 28/06/2019 AA- 1,004,300 1,001,430 2.93

1,000,000 5.35% Golden Assets

International Finance Limited

05/08/2019 AA3 1,021,547 977,487 2.86

500,000 7.50% PBFin Berhad

05/06/2059 AA2 565,884 539,528 1.58

500,000 4.85% Alpha Circle Sdn Bhd

17/11/2017 AA- 502,857 504,687 1.48

500,000 4.80% UEM Sunrise Berhad 08/04/2022 AA- 505,326 504,146 1.47

Total bonds in Malaysia 27,282,933 27,856,267 81.48

Quoted Securities

TRADING/SERVICES

500,000 Barakah-Offshore-RCULS 13/18 679,000 312,500 0.91

679,000 312,500 0.91

Collective investment scheme

30,073 Areca Islamic Cash Fund 31,012 31,014 0.09

5,289,949 Areca Situational Income Fund 5,300,000 5,397,864 15.79

5,331,012 5,428,878 15.88

Total investments 33,292,945 33,597,645 98.27

Accumulated unrealised gain on

financial assets at fair value

through profit or loss 304,700

Total fair value of financial

assets at fair value through

profit or loss

33,597,645



34

Financial assets at fair value through profit or loss as at 30 June 2015 are as follows:

Nominal


value

Fair value as at

30.6.2015

Fair value

as at 30.6.2015

expressed as a

percentage of

value of the

Fund

RM RM RM %

6,000,000 5.15% Alpha Circle Sdn Bhd

19/11/2019 AA- 6,036,403 6,054,463 18.26

3,000,000 8.25% Hong Leong Bank Berhad

09/09/2039 AA3 3,057,952 3,448,893 10.40

2,500,000 2.00% Eastern & Oriental

Berhad 06/03/2020 NR 2,089,527 2,145,095 6.48

2,000,000 4.66% Jati Cakerawala Sdn Bhd

31/07/2018 AA3 2,038,812 2,037,992 6.14

2,000,000 4.50% AMMB Holdings Berhad 08/08/2019 AA3 2,035,014 2,017,214 6.08

1,250,000 6.70% CIMB Bank Berhad

07/10/2038 AA 1,298,204 1,344,603 4.05

1,000,000 8.25% AmBank (M) Berhad

18/08/2039 A2

1,030,062

1,156,362

3.49

1,000,000 3.00% TRIplc Ventures Sdn Bhd

08/10/2021 AAA 1,012,266 1,072,596 3.23

1,000,000 5.60% CIMB Thai Bank Public

Company Limited 05/07/2024 AA3 1,026,849 1,049,229 3.16

1,000,000 7.50% DRB-Hicom Berhad

28/12/2114 A 1,024,022 1,025,792 3.09

1,000,000 4.30% Noble Group Limited

29/01/2016 AA2 1,012,907 1,018,357 3.07

1,000,000 5.35% Golden Assets

International Finance Limited

05/08/2019 AA3 1,021,400 1,016,050 3.06

1,000,000 Sports Toto Malaysia Sdn Berhad

28/06/2019 AA- 1,004,432 1,004,452 3.03 750,000 4.75% Hong Leong Bank Berhad

30/12/2020 AA2 766,987 770,336 2.32

500,000 7.50% PBFin Berhad

05/06/2059 AA2 565,987 551,081 1.66

500,000 4.70% YTL Power International

Berhad 13/10/2021 AA1 505,686 509,956 1.54

500,000 4.80% UEM Sunrise Berhad

08/04/2022 AA- 505,392 508,362 1.53

500,000 4.85% Alpha Circle Sdn Bhd 17/11/2017 AA- 502,857 502,807 1.52

500,000 4.50% Hong Leong Bank Berhad

21/06/2024 AA2 500,555 498,965 1.50

1,000,000 5.50% Hong Leong Bank Berhad

5-Year Callable KLIBOR Range

Accrual FRNID 02/08/2018 NR 1,021,397 1,021,397 3.08

1,000,000 5.90% CIMB 5-Year Callable

KLIBOR Range Accrual FRNID

17/10/2018 NR 1,012,123 996,823 3.01

Total bonds in Malaysia 29,073,636 29,751,095 89.70



35

Nominal


value

Fair value

as at

30.6.2015

Fair value

as at 30.6.2015

expressed as a

percentage of

value of the

Fund

RM RM RM %

Bond in

Singapore

SGD

1,000,000 5.125% Genting Singapore Ltd

12/09/2017 NR 2,523,919 2,818,751 8.50

Total bonds in Singapore 2,523,919 2,818,751 8.50

Total unquoted fixed income

securities 31,597,555 32,569,846 98.20

Quoted Securities

TRADING/ SERVICES

500,000 Barakah-Offshore-RCULS 13/18 679,000 452,500 1.36

Total investments 32,276,555 33,022,346 99.56

Accumulated unrealised gain on

financial assets at fair value

through profit or loss 745,791

Total fair value of financial

assets at fair value through

profit or loss

33,022,346

9 CASH AND CASH EQUIVALENTS

30.6.2016 30.6.2015

RM RM

Bank balance with a licensed bank 24,794 9,466

Deposit with a licensed financial institution 613,660 181,362

638,454 190,828

The effective weighted average interest rate of short term deposit with a licensed financial

institutions per annum as at the date of statements of financial position as follows:

30.6.2016 30.6.2015

% %

Deposit with a licensed financial institution 3.35 3.15

The deposit have an average maturity of 6 days (30.6.2015: 7 days).



36

10 OTHER PAYABLES AND ACCRUALS

30.6.2016 30.6.2015

RM RM

Audit fee payable 8,760 7,738

Tax agent’s fee payable 3,600 4,028

Other payables 2,510 -

14,870 11,766

11 UNITS IN CIRCULATION

2016

Units

2015

Units

At beginning of the financial year 31,239,485 34,962,809

Creation arising from applications 1,770,552 -

Creation arising from distributions 1,463,442 1,681,262

Cancellation of units (1,993,032) (5,404,586)

At end of the financial year 32,480,447 31,239,485

Approved size of Fund 500,000,000 500,000,000

12 TRANSACTIONS BY THE FUND

Details of transactions with brokers and financial institutions by the Fund for the financial

year ended 30 June 2016 are as follows:

Brokers/Dealers

Value of

trades

% of

total

trades

Value

of

trades

% of

total

trades

RM % RM %

KAF Investment Bank Berhad 11,822,000 41.56 - -

Hong Leong Investment Bank Bhd 7,776,767 27.34 - -

CIMB Bank Bhd 7,035,492 24.72 - -

Areca Capital Sdn Bhd 750,000 2.64

RHB Investment Bank Berhad 560,000 1.97 - -

Ambank Berhad 502,650 1.77 - -

28,443,909 100.00 - -

Details of transactions with brokers and financial institutions by the Fund for the financial

period ended 30 June 2015 are as follows:

Brokers/Dealers

Value of

trades

% of

total

trades

Value

of

trades

% of

total

trades

RM % RM %

CIMB Bank Bhd 12,145,171 35.20 - -

KAF Investment Bank Berhad 7,350,000 21.31 - -

Hong Leong Investment Bank Bhd 6,183,500 17.92 - -

Ambank (M) Bhd 3,505,800 10.16 - - Malayan Banking Berhad 3,004,300 8.71 - -

HwangDBS Investment Bank Berhad 2,310,000 6.70 - -

34,498,771 100.00 - -

There is no brokerage fee charged by brokers/dealers.



37

13 UNITS HELD BY THE MANAGER AND PARTIES RELATED TO THE MANAGER

The related parties and their relationship with the Fund is as follows:

Related party Relationship

Areca Capital Sdn Bhd The Manager

Dato’ Wee Hoe Soon @ Gooi Hoe Soon A Director of The Manager

The number of units held by the Manager is as follows:

--------- 2016 --------- --------- 2015 --------

No. of units RM No. of units RM

Areca Capital Sdn Bhd 3,464,720 3,647,311 506,395 537,589 Dato’ Wee Hoe Soon @

Gooi Hoe Soon

612,550

644,831

584,569

620,578

Other than the above, there were no units held by the Manager and other Directors or parties

related to the Manager.

14 MANAGEMENT EXPENSE RATIO (“MER”)

2016 2015

% %

MER 1.36 1.32

Management expense ratio includes management fee, audit fee, tax agent's fee and other

administrative expenses which is calculated as follows:

MER = (A + B + C + D) x 100

E

A = Management fee

B = Audit fee

C = Tax agent's fee

D = Other expenses

E = Average net asset value of the Fund, calculated on a daily basis

The average net asset value of the Fund for the financial year is RM33,104,351 (2015:

RM34,085,545).

15 PORTFOLIO TURNOVER

2016 2015

The portfolio turnover for the financial year 0.33 0.34

The portfolio turnover is derived from the following calculation:

(Total acquisition for the financial year + total disposal for the financial year) 2

Average net asset value of the Fund for the financial year calculated on a daily basis

where:

total acquisition for the financial year = RM11,332,479 (2015: RM10,087,800)

total disposal for the financial year = RM10,229,554 (2015: RM11,203,450)



38

16 SEGMENT INFORMATION

The internal reporting provided to the CEO for the Fund’s assets, liabilities and performance

is prepared on a consistent basis with the measurement and recognition principles of MFRS.

The CEO is responsible for the performance of the Fund and considers the business to have a

single operating segment.

The reportable operating segments derive their income by seeking investments to achieve

targeted returns consummate with an acceptable level of risk with each portfolio. These

returns consist of interest and gains on the appreciation in the value of investments.

There were no changes in the reportable operating segment during the financial year.

17 AUTHORISATION FOR ISSUE OF FINANCIAL STATEMENTS

The Financial Statements have been authorised for issue by the Manager on 23 August 2016.

Management Company

(740840-D)

Areca AUD Savings Fund

Annual ReportSept 2015

For the Year Ended 30 September 2015

ARECA CAPITAL SDN BHD (740840-D)

107, Blok B, Pusat Dagangan Phileo Damansara I

No.9, Jalan 16/11, Off Jalan Damansara

46350 Petaling Jaya

Selangor, Malaysia

T 603·7956 3111 F 603·7955 4111

E [email protected] W www.arecacapital.com

Penang Branch368-2-02 Belissa Row, Jalan Burma

Georgetown, 10350 Pulau Pinang

T 604·210 2011 F 604·210 2013

Ipoh Branch11A, (First Floor) Persiaran Greentown 5

Greentown Business Centre, 30450 Ipoh, Perak

T 605·249 6697 / 6698 F 605·249 6696

Melaka Branch95-A, Jalan Melaka Raya 24

Taman Melaka Raya, 75000 Melaka

T 606·282 9111 F 606·283 9112

cover annualreport steady fixedincome-fa -...

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