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ANNUAL REPORT

For the Financial Year Ended 31 August 2019

KENANGA GROWTHOPPORTUNITIES FUND

KENANGA GROWTH OPPORTUNITIES FUND

Contents Page

Corporate Directory ii

Directory of Manager’s Offi ces iii

Fund Information 1

Manager’s Report 2 - 7

Fund Performance 8 - 10

Trustee’s Report 11

Independent Auditors’ Report 12 - 14

Statement by the Manager 15

Financial Statements 16 - 47

ii Kenanga Growth Opportunities Fund Annual Report

CORPORATE DIRECTORY

Manager: Kenanga Investors Berhad (Company No. 353563-P)

Registered Offi ce Business Offi ceLevel 17, Kenanga Tower Level 14, Kenanga Tower237, Jalan Tun Razak 237, Jalan Tun Razak50400 Kuala Lumpur, Malaysia 50400 Kuala Lumpur, MalaysiaTel: 03-2172 2888 Tel: 03-2172 3000Fax: 03-2172 2999 Tel: 03-2172 3080 E-mail: [email protected] Website: www.KenangaInvestors.com.my

Board of Directors Investment CommitteeDatuk Syed Ahmad Alwee Alsree (Chairman) Syed Zafi len Syed Alwee (IndependentSyed Zafi len Syed Alwee (Independent Member) Director) Peter John Rayner (IndependentPeter John Rayner (Independent Member) Director) Imran Devindran bin Abdullah (IndependentImran Devindran bin Abdullah (Independent Member) Director) Ismitz Matthew De AlwisIsmitz Matthew De Alwis Norazian Ahmad Tajuddin (Independent Norazian Ahmad Tajuddin (Independent Member) Director)

Company Secretary: Norliza Abd Samad (MAICSA 7011089)

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

Trustee: CIMB Commerce Trustee Berhad (Company No. 313031-A)

Registered Offi ce Business Offi ce Level 13, Menara CIMB Level 6, Wisma CIMBJalan Stesen Sentral 2 No. 11, Jalan 4/83AKuala Lumpur Sentral off Jalan Pantai Baru50490 Kuala Lumpur 59200 Kuala LumpurTel: 03-2261 8888 Tel: 03-2261 8888Fax: 03-2261 0099 Fax: 03-2261 9889Website: www.cimb.com

Auditor: Ernst & Young (AF: 0039)

Level 23A, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, 50490 Kuala Lumpur.Tel: 03-7495 8000 Fax: 03-2095 5332

Tax Adviser: Ernst & Young Tax Consultants Sdn Bhd (Company No. 179793-K)

Level 23A, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, 50490 Kuala Lumpur.Tel: 03-7495 8000 Fax: 03-2095 5332

Membership: Federation of Investment Managers Malaysia (FIMM)

19-06-1, 6th Floor, Wisma Tune, 19, Lorong Dungun, Damansara Heights, 50490 Kuala Lumpur, Malaysia. Tel: 03-2093 2600 Fax: 03-2093 2700 Website: www.fi mm.com.my

iiiKenanga Growth Opportunities Fund Annual Report

REGIONAL BRANCH OFFICES:

Kuala LumpurLevel 13, Kenanga Tower237, Jalan Tun Razak50400 Kuala Lumpur, MalaysiaTel : 03-2172 3123 Fax : 03-2172 3133

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

KlangNo. 12, Jalan Batai Laut 3Taman Intan, 41300 KlangSelangor Darul EhsanTel : 03-3341 8818 / 03-3348 7889 Fax : 03-3341 8816

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

Miri 2nd Floor, Lot 1264Centre Point Commercial CentreJalan Melayu98000 Miri, Sarawak Tel : 085-416 866 Fax : 085-322 340

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

Johor BahruNo. 63Jalan Molek 3/1, Taman Molek81100 Johor Bahru, JohorTel : 07-288 1683Fax : 07-288 1693

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

KuantanGround Floor ShopNo. B8, Jalan Tun Ismail 125000 Kuantan, PahangTel : 09-514 3688Fax : 09-514 3838

IpohSuite 1, 2nd FloorNo. 63, Persiaran Greenhill30450 Ipoh, PerakTel : 05-254 7573 / 7570 / 7575Fax : 05-254 7606

Kota KinabaluLevel 8, Wisma Great EasternNo. 68, Jalan Gaya88000 Kota Kinabalu, SabahTel : 088-203 063 Fax : 088-203 062

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

DIRECTORY OF MANAGER’S OFFICES

1 Kenanga Growth Opportunities Fund Annual Report

1. FUND INFORMATION

1.1 Fund Name

Kenanga Growth Opportunities Fund (KGOF or the Fund)

1.2 Fund Category / Type

Equity / Growth

1.3 Investment Objective

The Fund aims to achieve consistent capital appreciation over the long-term by primarily investing in relatively smaller capitalized companies with good growth prospects.

1.4 Investment Strategy

The Fund is an equity growth fund that is actively managed based on both quantitative and qualitative disciplines. Its strategy is to invest in companies that are likely to yield higher earnings growth than the market average.

1.5 Duration

The Fund was launched on 23 April 2004 and it shall exist as long as it appears to the Manager and the Trustee that it is in the interests of the unit holders for it to continue.

1.6 Performance Benchmark

FTSE Bursa Malaysia Emas Index (FBM Emas).

1.7 Distribution Policy

Income (if any) as secondary objective, is paid annually.

1.8 Breakdown of unit holdings of the Fund as at 31 August 2019

Size of holdings No. of unit holders No. of units held 5,000 and below 2,647 3,893,168 5,001 - 10,000 356 2,491,519 10,001 - 50,000 352 6,598,686 50,001 - 500,000 49 5,374,170 500,001 and above 6 10,927,888 Total 3,410 29,285,431

2Kenanga Growth Opportunities Fund Annual Report

2. MANAGER’S REPORT

2.1 Explanation on whether the Fund has achieved its investment objective

For the fi nancial year under review, the Fund decreased 3.53% in net asset value (NAV) per unit terms, above its benchmark decrease of 10.78% in NAV per unit thus achieving its objective.

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

Performance Chart Since Launch (23/04/2004 - 31/08/2019)Kenanga Growth Opportunities Fund vs FBM Emas

Source: Novagni Analytics and Advisory

2.3 Investment strategies and policies employed during the fi nancial year under review

For the fi nancial year under review, the Fund’s investment strategy and policy were to invest in relatively smaller capitalized companies, i.e. companies with market capitalization of less than RM4 billion at the point of purchase. The strategy employed was in line with that disclosed in the Master Prospectus.

2.4 The Fund’s asset allocation as at 31 August 2019 and comparison with the previous fi nancial year

Asset 31 Aug 2019 31 Aug 2018Listed investment securities 84.3% 89.3%Short term deposits and cash 15.7% 10.7%

Reason for the differences in asset allocation

During the fi nancial year under review, the Fund has reduced its equity exposure from 89.3% to 84.3%. The exposure in equities was lower compared to the previous fi nancial year as the fund manager raised cash amid the heightening uncertainties in the global markets.

-40

-20

0

20

40

60

80

100

120

140

Apr

04

Dec

04

Jun

05D

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5Ju

n 06

Dec

06

Jun

07D

ec 0

7Ju

n 08

Dec

08

Jun

09D

ec 0

9Ju

n 10

Dec

10

Jun

11D

ec 1

1Ju

n 12

Dec

12

Jun

13D

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3Ju

n 14

Dec

14

Jun

15D

ec 1

5Ju

n 16

Dec

16

Jun

17D

ec 1

7Ju

n 18

Dec

18

Aug

19

% Cumulative Return, Launch to 31/08/2019

Kenanga Growth Opportunities : 96.91 FTSE Bursa Malaysia Emas Index : 85.37


2.5 Fund performance analysis based on NAV per unit (adjusted for income distribution; if any) since last review year

Year under review Kenanga Growth Opportunities Fund -3.53% FBM Emas -10.78% Source: Novagni Analytics and Advisory

During the fi nancial year under review, the Fund registered a negative return of 3.53%, outperforming the benchmark’s negative return of 10.78%. The outperformance was attributed to stock selection.

2.6 Review of the market

Market review

The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBMKLCI) declined 11.4% for the fi nancial year under review (1 September 2018 - 31 August 2019). The KLCI went into a correction mode and dropped to a low of 1,626.93 points on 18 December 2018 before recovering to current level.

Despite escalation in US-China trade tension, US stock indices continued to hit new highs, on the back of stronger than expected macro-economic data in September 2018. As widely expected, the Federal Reserve (Fed) raised interest rate by another 25 basis points (bps) in the September Federal Open Market Committee (FOMC) meeting, which refl ected the positive economic outlook. Elsewhere, the European Central Bank (ECB) reiterated expectation of no rate change until at least summer 2019. However, concerns over potential no-deal Brexit and Italy budget capped upside in the European markets.

October 2018 was a brutal month for equity markets. Equities tumbled amidst escalated US-China trade tension, rising treasury yields, disappointment over apple suppliers’ profi ts and UK’s introduction of digital tax. The International Monetary Fund (IMF) cut 2018/2019 global growth to 3.7% (previously 3.9%), the fi rst downgrade since July 2016. 10-year US treasury yield surged to 3.234%, the highest in seven years in early October before moderating to 3.144% by month end. The October correction sent Dow Jones, S&P and Nasdaq down month-on-month (MoM) by 5.1%, 6.9% and 9.2% respectively, erasing most of the gains in 2018. While China’s 3Q Gross Domestic Product (GDP) growth came in within expectation at 6.5%, October manufacturing purchasing manager’s index (PMI) dropped to 50.2 from 50.8 in September, the slowest in 2 years. Weighed by domestic slowdown and trade tension, the Shanghai and Shenzhen Index plunged 7.8% and 10.2% respectively.

Malaysia’s new government announced its maiden Budget 2019 in November 2018, with the increase of casino gaming tax and introduction of new taxes which include sugar tax, digital tax and airport departure levy. The economy is expected to grow at 4.8%/4.9% in 2018/2019 driven by private sector consumption growth of 9%/9.9% in 2018/2019 respectively. Fiscal defi cit is projected at 3.7% in 2018 and will narrow to 3.4% in 2019. The Budget however did not provide any boost to the market. Malaysia 3Q18 GDP rose 4.4% year-on-year (YoY) driven largely by consumer and private sector spending. The KLCI slipped 1.7% MoM to the year’s low of 1,679.86 points on the back of foreign selling and disappointing 3Q earnings.


2.6 Review of the market (contd.)

Market review (contd.)

Despite a 90-day trade truce between US and China, December witnessed a sharp correction for equity markets especially for developed markets. Markets tanked after Huawei’s Chief Financial Offi cer was arrested in Canada on US request for violation of US sanctions. Later US indicted another 2 Chinese hackers for stealing of intellectual property and confi dential business information. Meanwhile, the Fed raised interest rate for the fourth time in 2018 but forecasted 2 rate hikes in 2019 (versus previous forecast of 3 rate hikes). US government also experienced partial shutdown due to the stalemate between Trump and the House over border wall funding. Investors’ sentiment however improved towards month end after Trump hailed big progress on trade talks after a call with Xi JinPing. The KLCI rose 0.64% MoM to close the year of 2018 at 1,796.81 points on window dressing activities.

US markets rose in January in comparison with the rough correction back in December 2018, with the Dow Jones Industrial Average Index, S&P 500 Index and Nasdaq Composite Index rising 7.2%, 7.9%, and 9.7% respectively. The Fed kept interests rates unchanged at 2.25%-2.50% following its fi rst FOMC meeting in 2019. The central bank turned more dovish indicating it will be patient in its monetary normalisation plan given moderating economic activity, muted infl ation pressures and market uncertainty arising from concerns regarding trade war and global growth. Over in the European Union (EU), the Euro STOXX 50 rose 5.3% mimicking US markets and the ECB left its policy rates unchanged. In the UK, Brexit uncertainty continues as British parliament votes on rejecting Prime Minister Theresa May’s EU withdrawal agreement. This was followed by May’s administration winning a vote of no-confi dence in the House of Commons by a thin margin.

US markets rose for a second month in a row in February, with the Dow Jones Industrial Average Index, S&P 500 Index, and Nasdaq Composite Index rising 3.7%, 3%, and 3.4% respectively. European markets were generally positive as well. US President Donald Trump announced he will be delaying US tariffs on China until further notice. MSCI ASEAN Index declined 1.05% in February, underperforming North Asia markets. In Thailand, investors are closely watching to see if political divisions erupt again as the country will hold national elections on March 24. Thailand’s 4Q18 GDP rose 3.7% YoY, exceed forecast on domestic demand. The Bank of Thailand kept its benchmark rate unchanged after the fi rst hike in seven years in December. Singapore’s GDP grew 1.9% YoY in 4Q18, less than the 2.2% advance estimate from the Ministry of Trade and Industry, at the slowest pace in 2 years.

US markets continued its positive streak in March with the Dow Jones Industrial Average Index, S&P 500 Index, and Nasdaq Composite Index rising 0.1%, 1.8%, and 2.6% respectively. However, the Fed Yield Curve inverted, spooking investors as such inversion normally precedes a recession. Over to the EU, the central bank decided to keep rates at 0% and announced a new series of long-term lending operation to increase liquidity and counter the slow growing economy while the U.K. parliament rejected the EU withdrawal agreement for the third time, setting the motion for a no deal Brexit on April 12.



Market review (contd.)

US markets touched one-year high in April with the Dow Jones Industrial Average Index, S&P 500 Index, and Nasdaq Composite Index rising 2.56%, 5.34%, and 6.15% respectively, boosted by stronger than expected macro-economic data and solid corporate earnings. 1Q 2019 US GDP growth unexpectedly accelerated by 3.2%, and ISM manufacturing PMI strengthened to 55.3 in March. After a temporary inversion, the yield curve normalized during the month, which alleviated recession concern. Over to Europe, the agreement between UK and EU to delay Brexit deadline by six months to 31 October 2019 averted the immediate risk of no-deal Brexit. This, coupled with renewed monetary easing policy from the ECB boosted the Euro STOXX 50 index by another 4.86% MoM.

The renewed US-China trade tension with both countries raising tariffs against each other triggered a widespread sell-off in May. The sell-off also spilled over into the technology sector as US companies were banned from doing business with Huawei. In response to that, China toughened its stance on the trade war in the White Paper and emphasized that a trade deal must be mutually benefi cial, indicating further delay of a potential trade deal. One of the non-tariff retaliatory measures China could take is to restrict rare earth export to US as US imports up to 80% of its rare earth consumption from China. Brent oil price fell 11.4% MoM in May as trade tensions weigh on market sentiment and global economy outlook.

Asian equities rallied in June as markets priced in an aggressive Fed easing this year as weak US jobs data raised hopes for US interest rate cuts in addition to a tentative trade truce in the trade dispute between US and China ahead of the G20. Unsurprisingly, economic data dampened as the US - China trade war escalation continue to weigh on sentiment, with the US collecting 25% higher tariffs on many Chinese goods arriving in US seaports at the start of the month. China’s exports returned to growth in May despite higher US tariffs, but imports fell the most in nearly three years in a further sign of weak domestic demand that could prompt Beijing to step up stimulus measures. Trump threatened to hit China with another US$300 billion of tariffs, to which China responded with a tough stance by the commerce ministry.

Developed market equities continued their solid run in July with the S&P 500 reaching new all-time highs during July, closing 1.3% up over the month and up by 19% year to date. As expected, the Fed reduced US interest rate in July FOMC Meeting. The US economy has been showing tentative signs of improvement, with the job market bouncing back from an especially weak print in June and second quarter GDP growing at 2.1%, beating analyst expectations. With little change to the outlook for US-China trade relations during the month, investors were more focused on the Chinese economy in July. China’s second quarter GDP growth of 6.2% highlighted the general economy slowdown, but retail sales and industrial production data showed some tentative signs of stabilisation. In the UK, Boris Johnson was appointed as the new prime minister after his victory in the Conservative party leadership contest with roughly two-thirds of the vote.



Market review (contd.) The equity markets experienced sharp sell-off in August following escalation of US-China

trade war, recession fears sparked by US treasury yield curve inversion and social unrest in Hong Kong. Trump fi red additional tariffs by imposing 10% tariff on US$300 billion Chinese goods from 1 September but later decided to delay the 10% tariff on selected US$156 billion Chinese goods till 15 December. The Chinese Renminbi (USDCNY) depreciated to above 7.0 after additional tariff news, prompting US treasury department to label China as a currency manipulator. Adding to the equity market woes was the treasury yield curve inversion where yield of 10 years treasury dropped below 2 years treasury. Markets corrected on the inversion as the yield curve inversion has always been viewed as an indicator for future recession. By end August, China retaliated with 5%-10% tariffs on US$75 billion US imports. This resulted in US raising tariffs on US$250 billion China imports to 30% from 25% by October, and hiking the original 10% tariffs on US$300 billion Chinese good to 15%.

Locally, the KLCI outperformed the regional markets with 1.4% MoM decline. However, the FBM Small Cap dropped more by posting 4.9% MoM fall due to risk aversion. Malaysia’s 2Q19 GDP came in at 4.9%, slightly higher than consensus forecast of 4.7%. The second quarter corporate’s result reporting was disappointing and most banks saw deteriorating asset quality, underscoring challenging business environment. FTSE Russell announced that Malaysia will remain in its World Government Bond Index (WGBI) with 0.4% weight of the index. However, Malaysia will remain on the watch list until its next interim review in March 2020. Foreigners were net sellers of RM2.6 billion equities in August, taking fi rst eight months net selling to RM7.3 billion.

Market outlook

Investors will continue to track the development in US-China trade tension when negotiators from both countries will meet again in October. Equity markets are expected to remain volatile in the near term due to the re-escalating of US-China trade tension impacting the already weaker global growth outlook. While major central banks have moved towards easing bias providing the necessary liquidity support, markets will look for direction in US-China trade negotiation and the movement of Chinese Renminbi. Hong Kong’s recent proposal to withdraw an extradition bill should provide near term relief to Asian markets.

Fund strategy

In view of the headwinds, we continue to maintain a defensive stance and will focus on stock selection to outperform amid the volatile market. We are positive on selective stocks in the construction, oil and gas, Real Estate Investment Trusts and export-oriented sector.


2.7 Distributions

For the fi nancial year under review, the Fund did not declare any income distribution.

2.8 Details of any unit split exercise

The Fund did not carry out any unit split exercise during the fi nancial year under review.

2.9 Signifi cant changes in the state of affair of the Fund during the fi nancial year

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

However, a Master Prospectus dated 29 March 2019 was issued to make the following changes:

a. slight amendments to the terminology used in relation to the Fund for better clarity; and

b. general and administrative updates such as branches details, cross trade statement, unclaimed moneys statement and corporate details of the Manager.

Kindly refer to the Master Prospectus for further details.

2.10 Circumstances that materially affect any interests of the unit holders

During the fi nancial year under review, there were no circumstances that materially affected any interests of the unit holders.

2.11 Rebates and soft commissions

It is the policy of the Manager to credit any rebates received into the account of the Fund. Any soft commissions received by investment manager on behalf of the Fund are in the form of research and advisory services that assist in the decision making process relating to the investment of the Fund which are of demonstrable benefi t to unit holders of the Fund. Any dealing with the broker or dealer is executed on terms which are the most favourable for the Fund. For the fi nancial year under review, the Manager has received soft commissions from the stockbrokers.

2.12 Cross trade

During the fi nancial year under review, no cross-trade transactions were undertaken by investment manager for the Fund.


3. FUND PERFORMANCE

3.1 Details of portfolio composition of the Fund for the last three fi nancial years as at 31 August are as follows:

a. Distribution among industry sectors and category of investments:

FY FY FY 2019 2018 2017 % % %

Technology 25.8 14.9 7.3Industrial Products and Services 16.9 21.2 16.1Consumer Products and Services 15.8 13.6 18.9Construction 8.7 12.7 11.0Energy 7.0 5.9 -Health Care 4.9 7.8 -Property 2.7 10.7 12.9Utilities 2.0 - -Transportation and Logistics 0.5 - -Financial Services - 2.2 5.1Trading Services - - 12.4Special Purpose Acquisition Company - 0.2 0.2Real Estate Investment Trusts - - 4.3Warrants - 0.1 0.1Short term deposits and cash 15.7 10.7 11.7 100.0 100.0 100.0

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

b. Distribution among markets

The Fund invests in local listed investment securities, short term deposits and cash instruments only.


3.2 Performance details of the Fund for the last three fi nancial years ended 31 August are as follows:

FY FY FY 2019 2018 2017

Net asset value (“NAV”) (RM Million) 27.07* 25.87 24.62Units in circulation (Million) 29.29 26.99 24.45NAV per unit (RM) 0.9245* 0.9583 1.0071Highest NAV per unit (RM) 0.9957 1.0760 1.0641Lowest NAV per unit (RM) 0.7665 0.8861 0.9599Total return (%) -3.53 -4.85 1.50- Capital growth (%) -3.53 -4.85 1.50- Income growth (%) - - -Gross distribution per unit (sen) - - -Net distribution per unit (sen) - - -Management expense ratio (“MER”) (%) 1 1.79 1.88 1.87Portfolio turnover ratio (“PTR”) (times) 2 0.87 0.83 1.13

Note: Total return is the actual return of the Fund for the respective fi nancial years, computed based on NAV per unit and net of all fees.

MER is computed based on the total fees and recovered expenses incurred by

the Fund divided by the average fund size calculated on a daily basis. PTR is computed based on the average of the total acquisitions and total disposals of investment securities of the Fund divided by the average fund size calculated on a daily basis.

Above NAV and NAV per unit are not shown as ex-distribution as there were no distribution declared by the Fund in the fi nancial year under review.

1 MER is lower against previous fi nancial year mainly due to lower recovered expenses incurred during the fi nancial year under review.

2 The PTR during the fi nancial year under review was in line with last year’s PTR ratio.

* Based on bid price fair valuation method on all investments held by the Fund as at 31 August 2019, the NAV and NAV per unit would be RM26.95 million and RM0.9203 respectively.

(As disclosed under Note 13 of the fi nancial statements)


3.3 Average total return of the Fund

1 Year 3 Years 5 Years 31 Aug 18 31 Aug 16 31 Aug 14 - 31 Aug 19 - 31 Aug 19 - 31 Aug 19

Kenanga Growth Opportunities Fund -3.53% -1.40% -0.35%

FBM Emas -10.78% -0.88% -2.32%

Source: Lipper

3.4 Annual total return of the Fund

Year under review 1 Year 1 Year 1 Year 1 Year 31 Aug 18 31 Aug 17 31 Aug 16 31 Aug 15 31 Aug 14 - 31 Aug 19 - 31 Aug 18 - 31 Aug 17 - 31 Aug 16 - 31 Aug 15

Kenanga Growth Opportunities Fund -3.53% -4.85% 1.50% 14.61% -12.06%

FBM Emas -10.78% 0.87% 7.02% 7.36% -15.54%

Source: Lipper

Investors are reminded that past performance is not necessarily indicative of future performance. Unit prices and investment returns may fl uctuate.


4 TRUSTEE’S REPORT TO THE UNIT HOLDERS OF KENANGA GROWTH OPPORTUNITIES FUND

We, CIMB Commerce Trustee Berhad, being the Trustee of Kenanga Growth Opportunities Fund (“the Fund”) are of the opinion that Kenanga Investors Berhad (“the Manager”), acting in the capacity as Manager of the Fund, has fulfi lled its duties in the following manner for the fi nancial year ended 31 August 2019:

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

investment powers of the Manager under the Deed, the Securities Commission Malaysia’s Guidelines on Unit Trust Funds, the Capital Markets and Services Act 2007 (as amended from time to time) and other applicable laws;

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

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

For and on behalf of CIMB Commerce Trustee Berhad

Lee Kooi Yoke Chief Executive Offi cer

Kuala Lumpur, Malaysia

15 October 2019


5 INDEPENDENT AUDITORS’ REPORT TO THE UNIT HOLDERS OF KENANGA GROWTH OPPORTUNITIES FUND REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Opinion

We have audited the fi nancial statements of Kenanga Growth Opportunities Fund (“the Fund”), which comprise the statement of fi nancial position as at 31 August 2019, and the statement of comprehensive income, statement of changes in net asset value and statement of cash fl ows of the Fund for the fi nancial year then ended, and notes to the fi nancial statements, including a summary of signifi cant accounting policies and other explanatory information, as set out on pages 16 to 47.

In our opinion, the accompanying fi nancial statements give a true and fair view of the fi nancial position of the Fund as at 31 August 2019 and of its fi nancial performance and cash fl ows for the fi nancial year then ended in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards.

Basis for opinion

We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors’ responsibilities for the audit of the fi nancial statements section of our report. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.

Independence and other ethical responsibilities

We are independent of the Fund in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Code of Ethics for Professional Accountants (including International Independence Standards) (“IESBA Code”), and we have fulfi lled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.

Information other than the fi nancial statements and auditors’ report thereon

The Manager of the Fund (“the Manager”) is responsible for the other information. The other information comprises the information included in the annual report of the Fund, but does not include the fi nancial statements of the Fund and our auditors’ report thereon.

Our opinion on the fi nancial statements of the Fund does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the fi nancial statements of the Fund, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the fi nancial statements of the Fund or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.


5 INDEPENDENT AUDITORS’ REPORT TO THE UNIT HOLDERS OF KENANGA GROWTH OPPORTUNITIES FUND (CONTD.)

Responsibilities of the Manager and the Trustee for the fi nancial statements

The Manager is responsible for the preparation of fi nancial statements of the Fund that give a true and fair view in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards. The Manager is also responsible for such internal control as the Manager determines is necessary to enable the preparation of fi nancial statements of the Fund that are free from material misstatement, whether due to fraud or error.

In preparing the fi nancial statements of the Fund, the Manager is responsible for assessing the Fund’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Manager either intends to liquidate the Fund or to cease operations, or has no realistic alternative but to do so.

The Trustee is responsible for overseeing the Fund’s fi nancial reporting process. The Trustee is also responsible for ensuring that the Manager maintains proper accounting and other records as are necessary to enable true and fair presentation of these fi nancial statements.

Auditors’ responsibilities for the audit of the fi nancial statements

Our objectives are to obtain reasonable assurance about whether the fi nancial statements of the Fund as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to infl uence the economic decisions of users taken on the basis of these fi nancial statements.

As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the fi nancial statements of the Fund, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is suffi cient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Manager.


5 INDEPENDENT AUDITORS’ REPORT TO THE UNIT HOLDERS OF KENANGA GROWTH OPPORTUNITIES FUND (CONTD.)

Auditors’ responsibilities for the audit of the fi nancial statements (contd.) • Conclude on the appropriateness of the Manager’s use of the going concern basis of

accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast signifi cant doubt on the Fund’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the fi nancial statements of the Fund or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Fund to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the fi nancial statements of the Fund, including the disclosures, and whether the fi nancial statements of the Fund represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with the Manager regarding, among other matters, the planned scope

and timing of the audit and signifi cant audit fi ndings, including any signifi cant defi ciencies in internal control that we identify during our audit.

Other matters

This report is made solely to the unit holders of the Fund, as a body, in accordance with the Guidelines on Unit Trust Funds issued by the Securities Commission Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

Ernst & Young Ng Sue EanAF: 0039 No.03276/07/2020 JChartered Accountants Chartered Accountant


15 October 2019


6. STATEMENT BY THE MANAGER

I, Ismitz Matthew De Alwis, being a director of Kenanga Investors Berhad, do hereby state that, in the opinion of the Manager, the accompanying statement of fi nancial position as at 31 August 2019 and the related statement of comprehensive income, statement of changes in net asset value and statement of cash fl ows for the fi nancial year ended 31 August 2019 together with notes thereto, are drawn up in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards so as to give a true and fair view of the fi nancial position of Kenanga Growth Opportunities Fund as at 31 August 2019 and of its fi nancial performance and cash fl ows for the fi nancial year then ended and comply with the requirements of the Deed.

For and on behalf of the Manager KENANGA INVESTORS BERHAD

ISMITZ MATTHEW DE ALWIS Executive Director/Chief Executive Offi cer


15 October 2019


7. FINANCIAL STATEMENTS

7.1 STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31 AUGUST 2019

Note 2019 2018 RM RM

INVESTMENT INCOME

Interest income 88,719 127,699Dividend income 472,374 547,682Net loss from investments: - Financial assets at fair value through profi t or loss (“FVTPL”) 4 (878,829) (1,650,575) (317,736) (975,194)

EXPENSES

Manager’s fee 5 373,013 406,235Trustee’s fee 6 16,846 18,346Auditors’ remuneration 7,000 6,500Tax agent’s fee 4,000 4,000Administration expenses 30,691 58,434Brokerage and other transaction costs 74,802 - 506,352 493,515

NET LOSS BEFORE TAX (824,088) (1,468,709)

Income tax 7 - -

NET LOSS AFTER TAX, REPRESENTING TOTAL COMPREHENSIVE LOSS FOR THE FINANCIAL YEAR (824,088) (1,468,709)

Net loss after tax is made up as follows: Realised loss (1,378,043) (1,825,956) Unrealised gain 4 553,955 357,247 (824,088) (1,468,709)

The accompanying notes form an integral part of the fi nancial statements.


Kenanga Growth Opportunities Fund Annual Report17

7.2 STATEMENT OF FINANCIAL POSITION AS AT 31 AUGUST 2019


ASSETS

INVESTMENTS

Financial assets at FVTPL 4 22,241,668 22,960,706 Short term deposits 8 4,120,000 2,729,000 26,361,668 25,689,706

OTHER ASSETS

Amount due from Manager 5,149 -Amount due from licensed fi nancial institutions 9 691,197 486,350Other receivables 10 46,534 87,074Cash at bank 15,157 19,826 758,037 593,250

TOTAL ASSETS 27,119,705 26,282,956

LIABILITIES

Amount due to Manager - 32,815 Amount due to Trustee 1,560 1,465 Amount due to licensed fi nancial institutions 9 138,259 495,115Other payables 11 29,300 29,000TOTAL LIABILITIES 169,119 558,395

EQUITY

Unit holders’ contribution 25,981,323 23,931,210 Retained earnings 969,263 1,793,351 NET ASSET VALUE (“NAV”) ATTRIBUTABLE TO UNIT HOLDERS 12 26,950,586 25,724,561

TOTAL LIABILITIES AND EQUITY 27,119,705 26,282,956

NUMBER OF UNITS IN CIRCULATION 12(a) 29,285,431 26,994,603

NET ASSET VALUE PER UNIT (RM) 13 0.9203 0.9530


Kenanga Growth Opportunities Fund Annual Report 18

7.3 STATEMENT OF CHANGES IN NET ASSET VALUE FOR THE FINANCIAL YEAR ENDED 31 AUGUST 2019

Unit holders’ Retained Total Note contribution earnings NAV RM RM RM

2019At beginning of the fi nancial year 23,931,210 1,793,351 25,724,561 Total comprehensive loss - (824,088) (824,088)Creation of units 12(a) 5,658,831 - 5,658,831 Cancellation of units 12(a) (3,610,050) - (3,610,050)Distribution equalisation 12(a) 1,332 - 1,332 At end of the fi nancial year 25,981,323 969,263 26,950,586

2018At beginning of the fi nancial year 21,221,067 3,262,060 24,483,127 Total comprehensive loss - (1,468,709) (1,468,709)Creation of units 12(a) 7,318,396 - 7,318,396 Cancellation of units 12(a) (4,612,541) - (4,612,541)Distribution equalisation 12(a) 4,288 - 4,288 At end of the fi nancial year 23,931,210 1,793,351 25,724,561


7.4 STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 AUGUST 2019

2019 2018 RM RM

CASH FLOWS FROM OPERATING AND INVESTING ACTIVITIES

Proceeds from sale of fi nancial assets at FVTPL 20,673,962 20,220,809 Dividends received 513,659 515,973 Interest from deposits received 87,974 127,082 Tax agent’s fee paid (4,000) (4,000)Auditors’ remuneration paid (6,500) (6,500)Trustee’s fee paid (16,751) (18,374)Payment for other fees and expenses (28,289) (53,089)Manager’s fee paid (370,914) (406,846)Purchase of fi nancial assets at FVTPL (21,472,860) (23,117,432)Net cash used in operating and investing activities (623,719) (2,742,377)

CASH FLOWS FROM FINANCING ACTIVITIES

Cash received from units created 5,585,996 7,322,282 Cash paid on units cancelled (3,575,946) (4,708,151)Net cash generated from fi nancing activities 2,010,050 2,614,131

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 1,386,331 (128,246)CASH AND CASH EQUIVALENTS AT BEGINNING OF THE FINANCIAL YEAR 2,748,826 2,877,072 CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR 4,135,157 2,748,826

Cash and cash equivalents comprise: Cash at bank 15,157 19,826 Short term deposits 4,120,000 2,729,000 4,135,157 2,748,826



7.5 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 AUGUST 2019

1. THE FUND, THE MANAGER AND THEIR PRINCIPAL ACTIVITIES

Kenanga Growth Opportunities Fund (“the Fund”) was constituted pursuant to the executed Deed dated 16 April 2004 (collectively, together with deeds supplemental thereto, referred to as “the Deed”) between the Manager, Kenanga Funds Berhad, and CIMB Commerce Trustee Berhad (“the Trustee”). The Fund commenced operations on 23 April 2004 and will continue to be in operation until terminated by the Trustee as provided under Clause 38 of the Deed.

Pursuant to the executed Seventh Supplemental Deed dated 15 May 2013 between Kenanga Investors Berhad and CIMB Commerce Trustee Berhad, Kenanga Investors Berhad was appointed as the Manager of the Fund with effect from 8 June 2013.

Kenanga Investors Berhad is a wholly-owned subsidiary of Kenanga Investment Bank Berhad that is listed on the Main Market of Bursa Malaysia Securities Berhad. All of these companies are incorporated in Malaysia.

The principal place of business of the Manager is Level 14, Kenanga Tower, 237, Jalan Tun Razak, 50400 Kuala Lumpur.

The objective of the Fund is to achieve consistent capital appreciation over long-term by primarily investing in relatively smaller capitalised companies with good growth prospects based on equity securities.

The fi nancial statements were authorised for issue by the Chief Executive Offi cer of the Manager on 15 October 2019.

2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Fund is exposed to a variety of risks including market risk (which includes interest rate risk and price risk), credit risk and liquidity risk. Whilst these are the most important types of fi nancial risks inherent in each type of fi nancial instruments, the Manager and the Trustee would like to highlight that this list does not purport to constitute an exhaustive list of all the risks inherent in an investment in the Fund.

The Fund has an approved set of investment guidelines and policies as well as internal

controls which sets out its overall business strategies to manage these risks to optimise returns and preserve capital for the unit holders, consistent with the long-term objectives of the Fund.

a. Market risk

Market risk is the risk that the fair value or future cash fl ows of a fi nancial instrument will fl uctuate because of changes in market prices. Market risk includes interest rate risk and price risk.


2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) a. Market risk (contd.)

Market risk arises when the value of the investments fl uctuates in response to the activities of individual companies, general market or economic conditions. It stems from the fact that there are economy-wide perils, which threaten all businesses. Hence, investors are exposed to market uncertainties. Fluctuation in the investments’ prices caused by uncertainties in the economic, political and social environment will affect the NAV of the Fund.

The Manager manages the risk of unfavourable changes in prices by cautious review of the investments and continuous monitoring of their performance and risk profi les.

i. Interest rate risk

Interest rate risk refers to how the changes in the interest rate environment would affect the performance of Fund’s investments. Rate offered by the fi nancial institutions will fl uctuate according to the Overnight Policy Rate determined by Bank Negara Malaysia and this has direct correlation with the Fund’s investments in short term deposits.

The Fund is not exposed to signifi cant interest rate risk as its deposits are short term in nature and have fi xed interest rates.

Interest rate risk exposure

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

Weighted Non- average exposure to effective Up to interest rate interest 1 year movement Total rate* RM RM RM %

2019AssetsFinancial assets at FVTPL - 22,241,668 22,241,668Short term deposits 4,120,000 - 4,120,000 3.1Other assets - 758,037 758,037 4,120,000 22,999,705 27,119,705

LiabilitiesOther liabilities - 139,819 139,819

Total interest rate sensitivity gap 4,120,000 22,859,886 26,979,886

* Computed based on assets with exposure to interest rate movement only.



i. Interest rate risk (contd.)

Interest rate risk exposure (contd.)

Weighted Non- average exposure to effective Up to interest rate interest 1 year movement Total rate* RM RM RM %

2018AssetsFinancial assets at FVTPL - 22,960,706 22,960,706 Short term deposits 2,729,000 - 2,729,000 3.3Other assets - 593,250 593,250 2,729,000 23,553,956 26,282,956

LiabilitiesOther liabilities - 529,395 529,395

Total interest rate sensitivity gap 2,729,000 23,024,561 25,753,561

* Computed based on assets with exposure to interest rate movement only.

ii. Price risk

Price risk is the risk of unfavourable changes in the fair values of listed equity securities and listed warrants. The Fund invests in listed equity securities and listed warrants which are exposed to price fl uctuations. This may then affect the NAV of the Fund.



ii. Price risk (contd.)

Price risk sensitivity

The Manager’s best estimate of the effect on the loss for the fi nancial year due to a reasonably possible change in investments in listed equity securities and listed warrants with all other variables held constant is indicated in the table below:

Effects on loss for Changes in price the fi nancial year Increase/(Decrease) Gain/(Loss) Basis points RM

2019 Financial assets at FVTPL 5/(5) 11,121/(11,121)

2018Financial assets at FVTPL 5/(5) 11,480/(11,480)

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

Price risk concentration

The following table sets out the Fund’s exposure and concentration to price risk based on its portfolio of fi nancial instruments as at the reporting date.

Fair value Percentage of NAV 2019 2018 2019 2018 RM RM % %

Financial assets at FVTPL 22,241,668 22,960,706 82.5 89.3



ii. Price risk (contd.)

Price risk concentration (contd.)

The Fund’s concentration of investment security price risk from the Fund’s listed equity securities and listed warrants analysed by sector is as follows:

Fair value Percentage of NAV 2019 2018 2019 2018 RM RM % %

Technology 6,805,598 3,839,262 25.2 14.9Industrial Products and Services 4,472,073 5,458,856 16.6 21.2Consumer Products and Services 4,160,909 3,505,424 15.4 13.6Construction 2,285,413 3,278,384 8.5 12.7Energy 1,845,245 1,515,272 6.8 5.9Health Care 1,283,036 2,000,322 4.8 7.8Property 725,694 2,741,187 2.7 10.7Utilities 532,067 - 2.0 -Transportation and Logistics 131,514 - 0.5 -Financial Services - 563,230 - 2.2Special Purpose Acquisition Company - 49,920 - 0.2Warrants 119 8,849 - 0.1 22,241,668 22,960,706 82.5 89.3

b. Credit risk

Credit risk is the risk that the counterparty to a fi nancial instrument will cause a fi nancial loss to the Fund by failing to discharge an obligation. The Manager manages the credit risk by undertaking credit evaluation to minimise such risk.

i. Credit risk exposure

As at the reporting date, the Fund’s maximum exposure to credit risk is represented by the carrying amount of each class of fi nancial asset recognised in the statement of fi nancial position.

ii. Financial assets that are either past due or impaired

As at the reporting date, there are no fi nancial assets that are either past due or impaired.


2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) b. Credit risk (contd.)

iii. Credit quality of fi nancial assets

The Fund invests in deposits with fi nancial institutions licensed under the Financial Services Act 2013 and Islamic Financial Services Act 2013. The following table analyses the licensed fi nancial institutions by rating category:

Short term deposits

Percentage of total short term deposits Percentage of NAV 2019 2018 2019 2018 % % % %

RatingWR 83.3 81.7 12.7 8.7P1 16.7 18.3 2.6 1.9 100.0 100.0 15.3 10.6

c. Liquidity risk

Liquidity risk is defi ned as the risk that the Fund will encounter diffi culty in meeting obligations associated with fi nancial liabilities that are to be settled by delivering cash or another fi nancial asset. Exposure to liquidity risk arises because of the possibility that the Fund could be required to pay its liabilities or cancel its units earlier than expected. The Fund is exposed to cancellation of its units on a regular basis. Units sold to unit holders by the Manager are cancellable at the unit holders’ option based on the Fund’s NAV per unit at the time of cancellation calculated in accordance with the Deed.

The liquid assets comprise cash, short term deposits with licensed fi nancial institutions and other instruments, which are capable of being converted into cash within 7 days.

The following table analyses the maturity profi le of the Fund’s fi nancial assets and fi nancial liabilities in order to provide a complete view of the Fund’s contractual commitments and liquidity.

Up to 1 year Note 2019 2018 RM RM

AssetsFinancial assets at FVTPL 22,241,668 22,960,706 Short term deposits 4,120,000 2,729,000 Other assets 758,037 593,250 i. 27,119,705 26,282,956

LiabilitiesOther liabilities ii. 139,819 529,395

Equity iii. 26,950,586 25,724,561

Liquidity gap 29,300 29,000


2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) c. Liquidity risk (contd.)

i. Financial assets

Analysis of fi nancial assets at FVTPL into maturity groupings is based on the expected date on which these assets will be realised. The Fund’s investments in listed equity securities and listed warrants have been included in the “up to 1 year” category on the assumption that these are highly liquid investments which can be realised should all of the Fund’s unit holders’ equity be required to be redeemed. For other assets, the analysis into maturity groupings is based on the remaining period from the end of the reporting period to the contractual maturity date or if earlier, the expected date on which the assets will be realised.

ii. Financial liabilities

The maturity grouping is based on the remaining period from the end of the reporting period to the contractual maturity date or if earlier, the date on which liabilities will be settled. When the counterparty has a choice of when the amount is paid, the liability is allocated to the earliest period in which the Fund can be required to pay.

iii. Equity

As the unit holders can request for redemption of their units, they have been categorised as having a maturity of “up to 1 year”.

d. Regulatory reportings

It is the Manager’s responsibility to ensure full compliance of all requirements under the Guidelines on Unit Trust Funds issued by Securities Commission Malaysia. Any breach of any such requirement has been reported in the mandatory reporting to Securities Commission Malaysia on a monthly basis.


3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Basis of accounting

The fi nancial statements of the Fund have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRS”) as issued by the Malaysian Accounting Standards Board (“MASB”) and International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

The fi nancial statements have been prepared on the historical cost basis except as disclosed in the accounting policies below.

The accounting policies adopted are consistent with those of the previous fi nancial year except for the adoption of the new and amended MFRS and Interpretation Committee’s (“IC”) Interpretation, which became effective for the Fund on 1 September 2018.

Effective for fi nancial period beginning onDescription or after

Amendments to MFRS contained in the document entitled “Annual Improvements to MFRS Standards 2014 - 2016 Cycle” 1 January 2018 Amendments to MFRS 1: First-time Adoption of Malaysian Financial Reporting Standards contained in the document entitled “Annual Improvements to MFRS Standards 2014 - 2016 Cycle” 1 January 2018 Amendments to MFRS 128: Investments in Associates and Joint Ventures contained in the document entitled “Annual Improvements to MFRS Standards 2014 - 2016 Cycle” 1 January 2018 MFRS 9: Financial Instruments 1 January 2018 MFRS 15: Revenue from Contracts with Customers 1 January 2018 Clarifi cations to MFRS 15: Revenue from Contracts with Customers 1 January 2018 Amendments to MFRS 2: Classifi cation and Measurement of Shared-Based Payment Transactions 1 January 2018

Temporary exemption from MFRS 9 subject to certain criteria being met for annual periods beginning

Amendments to MFRS 4: Applying MFRS 9 Financial on or after Instruments with MFRS 4 Insurance Contracts 1 January 2018 Amendments to MFRS 140: Transfers of Investment Property 1 January 2018 IC Interpretation 22: Foreign Currency Transactions and Advance Consideration 1 January 2018

The adoption of the new and amended MFRS and IC interpretation did not have any signifi cant impact on the fi nancial position or performance of the Fund other than the impacts as discussed below:


3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

a. Basis of accounting (contd.)

MFRS 9 Financial Instruments

MFRS 9 Financial Instruments replaces MFRS 139 Financial Instruments: Recognition and Measurement and all previous versions of MFRS 9 for annual periods on or after 1 January 2018. MFRS 9 requires fi nancial assets to be classifi ed on the basis of the business model within which they are held and their contractual cash fl ow characteristics. The requirements related to the fair value option for fi nancial liabilities were also changed to address own credit risk. The adoption of MFRS 9 has no effect on the classifi cation and measurement of the Fund’s fi nancial assets and fi nancial liabilities.

MFRS 9 also requires impairment assessments to be based on an expected credit loss model, replacing the MFRS 139 incurred loss model. Finally, MFRS 9 aligns hedge accounting more closely with risk management, establish a more principle-based approach to hedge accounting and address inconsistencies and weaknesses in the previous model.

The Fund did not change the classifi cation of its investments nor were there any material fi nancial impact arising from the adoption of this standard.

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

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


Amendments to MFRS contained in the document entitled “Annual Improvements to MFRS Standards document 2015 - 2017 Cycle” 1 January 2019 Amendments to MFRS 3 and MFRS 11: Previously Held Interest in a Joint Operation contained in the document entitled “Annual Improvements to MFRS Standards 2015 - 2017 Cycle” 1 January 2019 Amendments to MFRS 112: Income Tax Consequences of Payments on Financial Instruments Classifi ed as Equity contained in the document entitled “Annual Improvements to MFRS Standards 2015 - 2017 Cycle” 1 January 2019 Amendments to MFRS 123: Borrowing Costs Eligible for Capitalisation contained in the document entitled “Annual Improvements to MFRS Standards 2015 - 2017 Cycle” 1 January 2019 MFRS 16: Leases 1 January 2019 Amendments to MFRS 9: Prepayment Features with Negative Compensation 1 January 2019



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


Amendments to MFRS 119: Plan Amendment, Curtailment or Settlement 1 January 2019 Amendments to MFRS 128: Long-term Interests in Associates and Joint Ventures 1 January 2019 IC Interpretation 23: Uncertainty over Income Tax Treatments 1 January 2019 Amendments to MFRS 2: Share-Based Payment 1 January 2020 Amendments to MFRS 3: Business Combinations 1 January 2020 Amendments to MFRS 3: Defi nition of a Business 1 January 2020 Amendments to MFRS 6: Exploration for and Evaluation of Mineral Resources 1 January 2020 Amendments to MFRS 14: Regulatory Deferral Accounts 1 January 2020 Amendments to MFRS 101: Presentation of Financial Statements 1 January 2020 Amendments to MFRS 108: Accounting Policies, Changes in Accounting Estimates and Errors 1 January 2020 Amendments to MFRS 101 & MFRS 108: Defi nition of Material 1 January 2020 Amendments to MFRS 134: Interim Financial Reporting 1 January 2020 Amendment to MFRS 137: Provisions, Contingent Liabilities and Contingent Assets 1 January 2020 Amendment to MFRS 138: Intangible Assets 1 January 2020 Amendments to IC Interpretation 12: Service Concession Arrangements 1 January 2020 Amendments to IC Interpretation 19: Extinguishing Financial Liabilities with Equity Instruments 1 January 2020 Amendment to IC Interpretation 20: Stripping Costs in the Production Phase of a Surface Mine 1 January 2020 Amendments to IC Interpretation 22: Foreign Currency Transactions and Advance Consideration 1 January 2020 Amendments to IC Interpretation 132: Intangible Assets - Web Site Costs 1 January 2020 MFRS 17: Insurance Contracts 1 January 2021

Amendments to MFRS 10 and MFRS 128: Sale or Contribution To be announced of Assets between an Investor and its Associate or Joint Venture by MASB

The Fund will adopt the above pronouncements when they become effective in the respective fi nancial periods. These pronouncements are not expected to have any signifi cant impact to the fi nancial statements of the Fund upon their initial application.



c. Financial instruments

Financial assets are recognised in the statement of fi nancial position when, and only when, the Fund becomes a party to the contractual provisions of the fi nancial instruments.

i. Measurement categories of fi nancial assets and liabilities

From 1 September 2018, the Fund classifi es all of its fi nancial assets based on the business model for managing the assets and the asset’s contractual terms, measured at either:

• Amortised cost;• Fair value through other comprehensive income; and• Fair value through profi t or loss.

The Fund may designate fi nancial instruments at FVTPL, if so doing eliminates or signifi cantly reduces measurement or recognition inconsistencies.

The Fund’s other fi nancial assets include cash at bank balances, short term deposits, trade receivables and other receivables. Prior to 1 September 2018, the Fund classifi ed its other fi nancial assets as receivables (amortised cost), as explained in Note 3(c)(iii).

Financial liabilities are classifi ed according to the substance of the contractual arrangements entered into and the defi nitions of a fi nancial liability. Financial liabilities are classifi ed as either fi nancial liabilities at FVTPL or other fi nancial liabilities.

The Fund’s other fi nancial liabilities include trade payables and other payables.

Other fi nancial liabilities are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest rate (“EIR”) method. Gains or losses are recognised in profi t or loss when the liabilities are derecognised, and through the amortisation process.

ii. Initial recognition and subsequent measurement

The classifi cation of fi nancial assets at initial recognition depends on their contractual terms and the business model for managing the instruments, as described in Note 3(c)(iii). Financial assets are initially measured at their fair value, except in the case of fi nancial assets recorded at FVTPL, transaction costs are added to, or subtracted from, this amount. Trade receivables are measured at the transaction price. When the fair value of fi nancial instruments at initial recognition differs from the transaction price, the Fund accounts for the Day 1 profi t or loss, as described below.

After initial measurement, debt instruments are measured at amortised cost, using the EIR, less allowance for impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fee or costs that are an integral part of the EIR. Expected credit losses (“ECLs”) are recognised in the statement of comprehensive income when the investments are impaired.

Financial assets at FVTPL are recorded in the statement of fi nancial position at fair value. Changes in fair value are recorded in profi t or loss.



c. Financial instruments (contd.)

iii. Due from banks, short term deposits, trade and other receivables at amortised cost

Prior to 1 September 2018, included in the fi nancial assets are cash at bank balances, short term deposits and other receivables including receivables which are those non-derivative fi nancial assets with fi xed or determinable payments that were not quoted in an active market.

From 1 September 2018, the Fund only measures the amount due from banks, short term deposits and other receivables at amortised cost if both of the following conditions are met:

• The fi nancial asset is held within a business model with the objective to hold fi nancial assets in order to collect contractual cash fl ows; and

• The contractual terms of the fi nancial asset give rise on specifi ed dates to cash fl ows that are solely payments of principal and interest (“SPPI”) on the principal amount outstanding.

The details of these conditions are outlined below.

Business model assessment

The Fund determines its business model at the level that best refl ects how it manages groups of fi nancial assets to achieve its business objective.

The Fund’s business model is not assessed on an instrument-by-instrument basis, but at a higher level of aggregated portfolios and is based on observable factors such as:

• How the performance of the business model and the fi nancial assets held within that business model are evaluated and reported to the entity’s key management personnel;

• The risks that affect the performance of the business model (and the fi nancial assets held within that business model) and, in particular, the way those risks are managed;

• How managers of the business are compensated (for example, whether the compensation is based on the fair value of the assets managed or on the contractual cash fl ows collected); and

• The expected frequency, value and timing of sales are also important aspects of the Fund’s assessment.

The business model assessment is based on reasonably expected scenarios without taking ‘worst case’ or ‘stress case’ scenarios into account. If cash fl ows after initial recognition are realised in a way that is different from the Fund’s original expectations, the Fund does not change the classifi cation of the remaining fi nancial assets held in that business model, but incorporates such information when assessing newly originated or newly purchased fi nancial assets going forward, unless it has been determined that there has been a change in the original business model.



c. Financial instruments (contd.)

iii. Due from banks, short term deposits, trade and other receivables at amortised cost (contd.)

The SPPI test

As a second step of its classifi cation process, the Fund assesses the contractual terms of fi nancial assets to identify whether they meet the SPPI test.

‘Principal’ for the purpose of this test is defi ned as the fair value of the fi nancial asset at initial recognition and may change over the life of the fi nancial asset (for example, if there are repayments of principal or amortisation/accretion of the premium/discount).

The most signifi cant elements of interest within a lending arrangement are typically the consideration for the time value of money and credit risk. To make the SPPI assessment, the Fund applies judgement and considers relevant factors such as the currency in which the fi nancial asset is denominated, and the period for which the interest rate is set.

In contrast, contractual terms that introduce a more than de minimis exposure to risks or volatility in the contractual cash fl ows that are unrelated to a basic lending arrangement do not give rise to contractual cash fl ows that are solely payments of principal and interest on the amount outstanding. In such cases, the fi nancial asset is required to be measured at FVTPL.

iv. Financial investments

Financial assets in this category are those that are managed in a fair value business model, or that have been designated by management upon initial recognition, or are mandatorily required to be measured at fair value under MFRS 9. This category includes debt instruments whose cash fl ow characteristics fail the SPPI criterion or are not held within a business model whose objective is either to collect contractual cash fl ows, or to both collect contractual cash fl ows and sell.

d. Reclassifi cation of fi nancial assets and liabilities

From 1 September 2018, the Fund has not reclassifi ed its fi nancial assets and fi nancial liabilities subsequent to their initial recognition and upon adoption of MFRS 9.

e. Derecognition of fi nancial assets

A fi nancial asset (or, where applicable, a part of a fi nancial asset or part of a group of similar fi nancial assets) is derecognised when the rights to receive cash fl ows from the fi nancial asset have expired. The Fund also derecognises the fi nancial asset if it has both transferred the fi nancial asset and the transfer qualifi es for derecognition.



e. Derecognition of fi nancial assets (contd.)

The Fund has transferred the fi nancial asset if, and only if, either:

• The Fund has transferred its contractual rights to receive cash fl ows from the fi nancial asset; or

• It retains the rights to the cash fl ows, but has assumed an obligation to pay the received cash fl ows in full without material delay to a third party under a ‘pass-through’ arrangement.

Pass-through arrangements are transactions whereby the Fund retains the contractual rights to receive the cash fl ows of a fi nancial asset (the ‘original asset’), but assumes a contractual obligation to pay those cash fl ows to one or more entities (the ‘eventual recipients’), when all of the following three conditions are met:

• The Fund has no obligation to pay amounts to the eventual recipients unless it has collected equivalent amounts from the original asset, excluding short-term advances with the right to full recovery of the amount lent plus accrued interest at market rates;

• The Fund cannot sell or pledge the original asset other than as security to the eventual recipients; and

• The Fund has to remit any cash fl ows it collects on behalf of the eventual recipients without material delay. In addition, the Fund is not entitled to reinvest such cash fl ows, except for investments in cash or cash equivalents including interest earned, during the period between the collection date and the date of required remittance to the eventual recipients.

A transfer only qualifi es for derecognition if either:

• The Fund has transferred substantially all the risks and rewards of the asset; or• The Fund has neither transferred nor retained substantially all the risks and rewards

of the asset, but has transferred control of the asset.

The Fund considers control to be transferred if and only if, the transferee has the practical ability to sell the asset in its entirety to an unrelated third party and is able to exercise that ability unilaterally and without imposing additional restrictions on the transfer.

When the Fund has neither transferred nor retained substantially all the risks and rewards and has retained control of the asset, the asset continues to be recognised only to the extent of the Fund’s continuing involvement, in which case, the Fund also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that refl ects the rights and obligations that the Fund has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration the Fund could be required to pay.

If continuing involvement takes the form of a written or purchased option (or both) on the transferred asset, the continuing involvement is measured at the value the Fund would be required to pay upon repurchase. In the case of a written put option on an asset that is measured at fair value, the extent of the entity’s continuing involvement is limited to the lower of the fair value of the transferred asset and the option exercise price.



f. Impairment of fi nancial assets (Policy applicable from 1 September 2018)

i. Overview of the expected credit loss (“ECL”) principles

As described in Note 3(a), the adoption of MFRS 9 has fundamentally changed the Fund’s receivables impairment method by replacing MFRS 139’s incurred loss approach with a forward-looking ECL approach.

ii. Write-offs

The Fund’s accounting policy under MFRS 9 remains the same as it was under MFRS 139. Financial assets are written off either partially or in their entirety only when the Fund has stopped pursuing the recovery. If the amount to be written off is greater than the accumulated loss allowance, the difference is fi rst treated as an addition to the allowance that is then applied against the gross carrying amount. Any subsequent recoveries are credited to credit loss expense.

g. Income

Income is recognised to the extent that it is probable that the economic benefi ts will fl ow to the Fund and the income can be reliably measured. Income is measured at the fair value of consideration received or receivable.

Interest income which includes the accretion of discount and amortisation of premium on fi xed income securities, is recognised using the effective interest method.

Dividend income is recognised on declared basis, when the right to receive the dividend is established.

The realised gain or loss on sale of investments is measured as the difference between the net disposal proceeds and the carrying amount of the investment.

h. Cash and cash equivalents

For the purpose of the statement of cash fl ows, cash and cash equivalents include cash at bank and short term deposits with licensed fi nancial institutions with maturities of three months or less, which have an insignifi cant risk of changes in value.

i. Income tax

Income tax on the profi t or loss for the fi nancial year comprises current tax. Current tax is the expected amount of income taxes payable in respect of the taxable profi t for the fi nancial year.

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

j. Unrealised reserves

Unrealised reserves represent the net gain or loss arising from carrying investments at their fair values at reporting date. This reserve is not distributable.



k. Unit holders’ contribution - NAV attributable to unit holders

The unit holders’ contribution to the Fund is classifi ed as equity instruments. Distribution equalisation represents the average amount of undistributed net income

included in the creation or cancellation price of units. This amount is either refunded to unit holders by way of distribution and/or adjusted accordingly when units are released back to the Trustee.

l. Functional and presentation currency

The fi nancial statements of the Fund are measured using the currency of the primary economic environment in which the Fund operates (“the functional currency”). The fi nancial statements are presented in Ringgit Malaysia (“RM”), which is also the Fund’s functional currency.

m. Distributions

Distributions are at the discretion of the Manager. A distribution to the Fund’s unit holders is accounted for as a deduction from retained earnings.

n. Signifi cant accounting judgments and estimates

The preparation of fi nancial statements requires the use of certain accounting estimates and exercise of judgment. Estimates and judgments are continually evaluated and are based on past experience, reasonable expectations of future events and other factors.

i. Critical judgments made in applying accounting policies

There are no major judgments made by the Manager in applying the Fund’s accounting policies.

ii. Key sources of estimation uncertainty

There are no key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a signifi cant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next fi nancial year.


4. FINANCIAL ASSETS AT FVTPL

2019 2018 RM RM

Financial assets held for trading, at FVTPL: Listed equity securities 22,241,549 22,951,857 Listed warrants 119 8,849 22,241,668 22,960,706

Net loss on fi nancial assets at FVTPL comprised: Realised loss on disposals (1,432,784) (2,007,822) Unrealised changes in fair values 553,955 357,247 (878,829) (1,650,575)

Details of fi nancial assets at FVTPL as at 31 August 2019:

Aggregate Percentage Quantity cost Fair value of NAV RM RM %

Listed equity securities

TechnologyD & O Green Technologies Berhad 864,200 667,292 427,779 1.6Frontken Corporation Berhad 727,100 580,274 1,134,276 4.2Globetronics Technology Berhad 514,233 1,129,025 863,911 3.2Greatech Technology Berhad 1,134,300 1,151,596 1,293,102 4.8JHM Consolidation Berhad 330,900 363,927 370,608 1.4Pentamaster Corporation Berhad 498,550 912,613 1,734,954 6.4Revenue Group Berhad 426,500 677,751 648,280 2.4ViTrox Corporation Berhad 47,800 270,768 332,688 1.2 5,753,246 6,805,598 25.2

Industrial Products and ServicesChemical Company of Malaysia Berhad 243,600 478,553 431,172 1.6Chin Hin Group Berhad 385,500 405,589 300,690 1.1Dufu Technology Corp. Berhad 851,080 1,253,618 1,914,930 7.1FoundPac Group Berhad 2,097,500 747,685 723,637 2.7Kelington Group Berhad 122,900 152,586 153,625 0.6Pecca Group Berhad 222,900 262,686 238,503 0.9Rohas Tecnic Berhad 178,800 238,879 101,022 0.4SKP Resources Bhd 188,600 250,159 205,574 0.7Uchi Technologies Berhad 143,900 338,114 402,920 1.5 4,127,869 4,472,073 16.6


4. FINANCIAL ASSETS AT FVTPL (CONTD.)

Details of fi nancial assets at FVTPL as at 31 August 2019: (contd.)


Listed equity securities (contd.)

Consumer Products and ServicesAEON Co. (M) Bhd 714,200 1,134,007 1,035,590 3.8 Ajinomoto (Malaysia) Berhad 5,900 113,828 101,480 0.4 CCK Consolidated Holdings Berhad 1,244,100 737,888 622,050 2.3 Hong Leong Industries Berhad 58,700 642,688 622,220 2.3 Lee Swee Kiat Group Berhad 179,800 166,631 117,769 0.4 Malayan Flour Mills Berhad 363,700 266,390 212,764 0.8 MBM Resources Berhad 58,400 233,220 239,440 0.9 Power Root Berhad 595,860 946,729 1,209,596 4.5 4,241,381 4,160,909 15.4

ConstructionEconpile Holdings Berhad 360,200 241,180 271,951 1.0 Gabungan AQRS Berhad 707,724 886,991 856,346 3.2 Kerjaya Prospek Group Berhad 458,720 725,346 646,795 2.4 MGB Berhad 767,400 854,225 510,321 1.9 2,707,742 2,285,413 8.5

EnergyHibiscus Petroleum Berhad 1,130,200 1,124,910 1,022,831 3.8 Yinson Holdings Berhad 121,300 382,835 822,414 3.0 1,507,745 1,845,245 6.8

Health CareApex Healthcare Berhad 258,800 307,962 525,364 2.0Duopharma Biotech Berhad 353,454 394,275 494,836 1.8Supermax Corporation Berhad 176,400 281,493 262,836 1.0 983,730 1,283,036 4.8

PropertyLBS Bina Group Berhad - ordinary shares 1,155,900 1,039,413 601,068 2.2LBS Bina Group Berhad - preference shares 39,140 43,054 30,529 0.1Malaysian Resources Corporation Berhad 128,900 112,788 94,097 0.4 1,195,255 725,694 2.7


4. FINANCIAL ASSETS AT FVTPL (CONTD.)

Details of fi nancial assets at FVTPL as at 31 August 2019: (contd.)


Listed equity securities (contd.)

UtilitiesMega First Corporation Berhad 43,900 151,327 165,942 0.6Taliworks Corporation Berhad 413,700 397,264 366,125 1.4 548,591 532,067 2.0

Transportation and LogisticsE.A. Technique (M) Berhad 316,900 144,632 131,514 0.5

Total listed equity securities 21,210,191 22,241,549 82.5

Listed warrants

SCGM Berhad - WA* 4,760 - 119 -

Total listed warrants - 119 -

Total fi nancial assets at FVTPL 21,210,191 22,241,668 82.5

Unrealised gain on fi nancial assets at FVTPL 1,031,477

* Corporate action entitlement


5. MANAGER’S FEE

The Manager’s fee is calculated on a daily basis at a rate not less than 1.2% per annum and not exceeding 3.0% per annum of the NAV of the Fund as provided under Clause 13(2) of the Deed.

The Manager is currently charging Manager’s fee of 1.55% per annum of the NAV of the Fund (2018: 1.55% per annum).

6. TRUSTEE’S FEE

Pursuant to the Eighth Supplemental Deed dated 25 July 2014, the Trustee’s fee is calculated on a daily basis at a rate not exceeding 0.07% per annum of the NAV of the Fund and subject to a minimum fee of RM9,000.

The Trustee is currently charging Trustee’s fee of 0.07% per annum of the NAV of the Fund (2018: 0.07% per annum).

7. INCOME TAX

Income tax is calculated at the Malaysian statutory tax rate of 24% of the estimated assessable income for the current and previous fi nancial years.

Income tax is calculated on investment income less partial deduction for permitted expenses as provided for under Section 63B of the Income Tax Act, 1967.

A reconciliation of income tax expense applicable to net loss before tax at the statutory income tax rate to income tax expense at the effective income tax rate of the Fund is as follows:

2019 2018 RM RM

Net loss before tax (824,088) (1,468,709)

Tax at Malaysian statutory tax rate of 24% (2018: 24%) (197,781) (352,490)Tax effect of: Income not subject to tax (267,612) (247,831) Losses not deductible for tax purposes 343,868 481,877 Expenses not deductible for tax purposes 24,553 12,200 Restriction on tax deductible expenses for unit trust fund 96,972 106,244 Income tax for the fi nancial year - -

8. SHORT TERM DEPOSITS

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


9. AMOUNT DUE FROM/TO LICENSED FINANCIAL INSTITUTIONS

Amount due from/to licensed fi nancial institutions relates to the amount to be received from or paid to licensed fi nancial institutions arising from the sales and purchase of investments.

10. OTHER RECEIVABLES

2019 2018 RM RM

Dividend receivables 44,965 86,250 Interest receivable from short term deposits 1,569 824 46,534 87,074

11. OTHER PAYABLES

2019 2018 RM RM

Accrual for auditors’ remuneration 7,000 6,500 Accrual for tax agent’s fees 4,500 4,500 Provision for printing and other expenses 17,800 18,000 29,300 29,000

12. NET ASSET VALUE ATTRIBUTABLE TO UNIT HOLDERS

NAV attributable to unit holders is represented by:


Unit holders’ contribution (a) 25,981,323 23,931,210

Retained earnings: Realised reserves (62,214) 1,315,829 Unrealised reserves 1,031,477 477,522 969,263 1,793,351

26,950,586 25,724,561


12. NET ASSET VALUE ATTRIBUTABLE TO UNIT HOLDERS (CONTD.)

(a) Unit holders’ contribution

2019 2018 No. of units RM No. of units RM

At beginning of the fi nancial year 26,994,603 23,931,210 24,446,628 21,221,067 Add: Creation of units 6,243,819 5,658,831 7,352,122 7,318,396 Less: Cancellation of units (3,952,991) (3,610,050) (4,804,147) (4,612,541)Distribution equalisation - 1,332 - 4,288At end of the fi nancial year 29,285,431 25,981,323 26,994,603 23,931,210

The Manager, Kenanga Investors Berhad, did not hold any units in the Fund, either legally or benefi cially, as at 31 August 2019 (2018: nil). The number of units legally or benefi cially held by the other parties related to the Manager were 24,915 units valued at RM22,929 as at 31 August 2019 (2018: 23,966 units valued at RM22,840).

13. NET ASSET VALUE PER UNIT

Financial assets at FVTPL have been valued at the bid prices at the close of business. In accordance with the Deed, the calculation of NAV attributable to unit holders per unit for the creation and cancellation of units is computed based on fi nancial assets at FVTPL valued at the last done market price.

A reconciliation of NAV attributable to unit holders for creation/cancellation of units and the NAV attributable to unit holders per the fi nancial statements is as follows:

2019 2018 RM RM/Unit RM RM/Unit

NAV attributable to unit holders for creation/cancellation of units 27,074,660 0.9245 25,869,785 0.9583Effects of adopting bid prices as fair value (124,074) (0.0042) (145,224) (0.0053)NAV attributable to unit holders per statement of fi nancial position 26,950,586 0.9203 25,724,561 0.9530

14. PORTFOLIO TURNOVER RATIO (“PTR”)

PTR for the fi nancial year is 0.87 times (2018: 0.83 times).

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


15. MANAGEMENT EXPENSE RATIO (“MER”)

MER for the fi nancial year is 1.79% per annum (2018: 1.88% per annum).

MER is the ratio of total fees and recovered expenses of the Fund expressed as a percentage of the Fund’s average NAV, calculated on a daily basis.

16. TRANSACTIONS WITH LICENSED FINANCIAL INSTITUTIONS

Brokerage, stamp duty Transaction Percentage and clearing Percentage value of total fee of total RM % RM %

Kenanga Investment Bank Berhad* 14,879,220 35.5 39,122 34.7RHB Investment Bank Berhad 4,926,356 11.7 12,922 11.5Maybank Investment Bank Berhad 4,707,322 11.2 13,388 11.9UOB Kay Hian Securities (M) Sdn Bhd 3,856,266 9.2 10,436 9.3Affi n Hwang Investment Bank Berhad 3,586,359 8.5 9,040 8.0Public Investment Bank Berhad 3,417,279 8.1 8,827 7.8Hong Leong Investment Bank Berhad 3,157,081 7.5 9,808 8.7CIMB Investment Bank Berhad 2,090,206 5.0 5,553 4.9KAF-Seagroatt & Campbell Securities Sdn Bhd 697,867 1.7 1,674 1.5Alliance Investment Bank Berhad 251,599 0.6 797 0.7Others 410,351 1.0 1,117 1.0 41,979,906 100.0 112,684 100.0

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

The above transaction values are in respect of listed equity securities and listed warrants.

The directors of the Manager are of the opinion that the transactions with the related party have been entered into in the normal course of business and have been established on terms and conditions that are not materially different from that obtainable in transactions with unrelated parties. The Manager is of the opinion that the above dealings have been transacted on an arm’s length basis.


17. SEGMENTAL REPORTING

a. Business segments

In accordance with the objective of the Fund, the Fund can invest 70% to 98% in equity securities and 2% to 30% in fi xed income securities/liquid assets. The following table provides an analysis of the Fund’s revenue, results, assets and liabilities by business segments:

Listed investment Other securities investments Total RM RM RM

2019RevenueSegment (loss)/income (406,455) 88,719 Segment expenses (74,802) - Net segment (loss)/income representing segment results (481,257) 88,719 (392,538)Unallocated expenditure (431,550)Loss before tax (824,088)Income tax -Net loss after tax (824,088)

AssetsFinancial assets at FVTPL 22,241,668 -Short term deposits - 4,120,000 Other segment assets 736,162 1,569 Total segment assets 22,977,830 4,121,569 27,099,399 Unallocated assets 20,306 27,119,705

LiabilitiesSegment liabilities 138,259 - 138,259 Unallocated liabilities 30,860 169,119


17. SEGMENTAL REPORTING (CONTD.)

a. Business segments (contd.)

Listed investment Other securities investments Total RM RM RM

2018RevenueSegment (loss)/income (1,102,893) 127,699 (975,194)Unallocated expenditure (493,515)Loss before tax (1,468,709)Income tax -Net loss after tax (1,468,709)

AssetsFinancial assets at FVTPL 22,960,706 - Short term deposits - 2,729,000 Other segment assets 572,600 824 Total segment assets 23,533,306 2,729,824 26,263,130 Unallocated assets 19,826 26,282,956

LiabilitiesSegment liabilities 495,115 - 495,115 Unallocated liabilities 63,280 558,395

b. Geographical segments

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


18. FINANCIAL INSTRUMENTS

a. Classifi cation of fi nancial instruments

The Fund’s fi nancial assets and fi nancial liabilities are measured on an ongoing basis at either fair value or at amortised cost based on their respective classifi cation. The signifi cant accounting policies in Note 3 describe how the classes of fi nancial instruments are measured, and how income and expenses, including fair value gains and losses, are recognised.

The following table analyses the fi nancial assets and fi nancial liabilities of the Fund in the statement of fi nancial position by the class of fi nancial instruments to which they are assigned and therefore by the measurement basis.

Financial Financial assets at Other assets amortised fi nancial at FVTPL cost liabilities Total RM RM RM RM

2019AssetsListed equity securities 22,241,549 - - 22,241,549Listed warrants 119 - - 119Short term deposits - 4,120,000 - 4,120,000Amount due from licensed fi nancial institutions - 691,197 - 691,197Amount due from Manager - 5,149 - 5,149Other receivables - 46,534 - 46,534Cash at bank - 15,157 - 15,157 22,241,668 4,878,037 - 27,119,705

LiabilitiesAmount due to Trustee - - 1,560 1,560Amount due to licensed fi nancial institutions - - 138,259 138,259 - - 139,819 139,819

2018AssetsListed equity securities 22,951,857 - - 22,951,857Listed warrants 8,849 - - 8,849Short term deposits - 2,729,000 - 2,729,000Amount due from licensed fi nancial institutions - 486,350 - 486,350Other receivables - 87,074 - 87,074Cash at bank - 19,826 - 19,826 22,960,706 3,322,250 - 26,282,956

LiabilitiesAmount due to Manager - - 32,815 32,815Amount due to Trustee - - 1,465 1,465Amount due to licensed fi nancial institutions - - 495,115 495,115 - - 529,395 529,395


18. FINANCIAL INSTRUMENTS (CONTD.)

b. Financial instruments that are carried at fair value

The Fund’s fi nancial assets at FVTPL are carried at fair value. The fair values of these fi nancial assets were determined using prices in active markets.

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

Level 1 Level 2 Level 3 Total RM RM RM RMInvestments:2019Listed equity securities 22,241,549 - - 22,241,549 Listed warrants 119 - - 119

2018Listed equity securities 22,951,857 - - 22,951,857Listed warrants 8,849 - - 8,849

Level 1: Listed prices in active marketLevel 2: Model with all signifi cant inputs which are observable market dataLevel 3: Model with inputs not based on observable market data

The fair values of listed equity securities and listed warrants are determined by reference to Bursa Malaysia Securities Berhad’s bid prices at reporting date.

c. Financial instruments not carried at fair value and which their carrying amounts are reasonable approximations of fair value

The carrying amounts of the Fund’s other fi nancial assets and fi nancial liabilities are not carried at fair value but approximate fair values due to the relatively short-term maturity of these fi nancial instruments.


19. CAPITAL MANAGEMENT

The capital of the Fund can vary depending on the demand for creation and cancellation of units to the Fund.

The Fund’s objectives for managing capital are:

a. To invest in investments meeting the description, risk exposure and expected return indicated in its prospectus;

b. To maintain suffi cient liquidity to meet the expenses of the Fund, and to meet cancellation requests as they arise; and

c. To maintain suffi cient fund size to make the operations of the Fund cost-effi cient.

No changes were made to the capital management objectives, policies or processes during the current and previous fi nancial years.


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Investor Services Center Head Offi ce, Kuala LumpurToll Free Line: 1 800 88 3737 Level 14, Kenanga Tower, 237, Jalan Tun RazakFax: +603 2172 3133 50400 Kuala Lumpur, MalaysiaEmail: [email protected] Tel: 03-2172 3000 Fax: 03-2172 3080

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