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ASEAN Equity Fund

Quarterly Report 30 September 2016(unaudited)

Fund ManagerSATURNA SDN BHD (342171-V)Suite 5-03, 5th Floor, Menara Atlan161B Jalan Ampang, 50450 Kuala LumpurTel: (603)2164 5303 Fax: (603)2164 5308Email: [email protected] Website: www.saturna.com.my

TrusteeSCBMB Trustee Berhad (1005793-T)

2 ASEAN Equity Fund Quarterly Report 30 September 2016

CONTENTS

1. FUND MANAGER'S REPORT 3

Fund Name 3

Type of Fund 3

Category of Fund 3

Investment Objective 3

Distribution Policy 3

Breakdown of Unit Holdings By Size 3

Performance Benchmark 3

Fund Performance 3

Financial Performance 4

Average Total Return 4

Stock Market Review 5

Market Outlook and Investment Strategy 5

Asset Allocation of The Fund 5

2. STATEMENT BY FUND MANAGER 6

3. STATEMENT OF FINANCIAL POSITION 7

4. STATEMENT OF COMPREHENSIVE INCOME 8

5. STATEMENT OF CHANGES IN NET ASSET VALUE 9

6. STATEMENT OF CASH FLOWS 10

7. INVESTMENTS 11-12

8. NOTES TO FINANCIAL STATEMENTS 13-15

9. CORPORATE INFORMATION 16

Investors are advised to read the Fund’s Information Memorandum and understand the risks and fees involved and, if necessary, consult their professional adviser before investing. To obtain an Information Memorandum and other important information about Saturna Sdn Bhd’s ASEAN Equity Fund, please visit www.saturna.com.my or call our Kuala Lumpur office at 603 2164 5303.

Past performance of a fund should not be taken as indicative of its future performance.

Where a unit split or distribution is declared, investors are advised that following the issuance of additional units or distribution, the Net Asset Value (“NAV”) per unit will be reduced from pre-unit split or pre-distribution NAV to post-unit split NAV or ex-distribution NAV. Where a unit split is declared, investors should be aware of the fact that the value of their investment in Malaysian ringgit will remain unchanged after the distribution of the additional units.

The Information Memorandum as of 07-FEB-2014 has been lodged with the Securities Commission Malaysia who takes no responsibilities for its contents.

Units of the fund will only be sold to properly qualified investors upon receipt of an application form in good order and accompanying a copy of the Information Memorandum.

Investments in the Fund are exposed to security risk, in addition to price levels risk, concentration risk, country risk, currency risk, active investment risk, and Sharia non-compliance risk.

The Dow Jones Islamic Market ASEAN Index measures the stock performance of companies in the ASEAN region that pass rules-based screens for compliance with Islamic principles. The index covers Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam.

Saturna Sdn Bhd is a wholly-owned subsidiary of Saturna Capital Corporation of the United States of America.

30 September 2016 Quarterly Report ASEAN Equity Fund 3

1. FUND MANAGER’S REPORT

FUND NAME

ASEAN Equity Fund (“the Fund”)

TYPE OF FUND

Growth Fund

CATEGORY OF FUND

Shariah-compliant Equity (wholesale)

INVESTMENT OBJECTIVE

To achieve long-term capital growth by investing in Southeast Asian markets.

DISTRIBUTION POLICY

Subject to availability of income, distributions will be made on a yearly basis.

Any distributions shall be automatically reinvested in additional Units at the date of distribution, unless the Unit Holder specifically requests, in the application or in writing, for distributions to be made via cash payment. Any unclaimed distribution cheques will be automatically reinvested in additional Units at the expiry of the six-month validity period for cheques, based on the prevailing Net Asset Value (NAV) seven (7) Business Days after the validity period of the cheques.

BREAKDOWN OF UNIT HOLDINGS BY SIZE

Units No. of Unit holders % Unit holdings %

50,001 to 100,000 1 20.00 93,730 0.88

100,001 to 500,000 2 40.00 528,867 4.99

500,001 to 1,000,000 1 20.00 500,770 4.72

1,000,001 & above 1 20.00 9,481,620 89.41

Total 5 100.00 10,604,987 100.00

PERFORMANCE BENCHMARK

Dow Jones Islamic Market ASEAN Total Return Index (“the Benchmark”)

FUND PERFORMANCE

For the period 1 July 2016 - 30 September 2016, the Fund registered a return of 1.65%, as compared to the Benchmark’s 4.17%. Since inception on 7 February 2014, the Fund registered a return of 13.72%, as compared to the Benchmark’s 23.14%.

The underperformance was due to lower equity allocation in a rising equity environment and selection of certain stocks. Generally, we have a long-term positive view on our stock holdings.

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Performance of the FundFrom 7 February 2014 (inception date) to 30 September 2016

ASEAN Equity FundDow Jones Islamic Market ASEAN Total Return Index

25%


FINANCIAL PERFORMANCE (9 MONTHS ENDING)

As at 30 Sep 2016 30 Sep 2015 30 Sep 2014

Net Asset Value (RM) 12,059,845 11,416,942 10,778,165

Units in Circulation (units)

10,604,987 10,604,987 10,261,987

Net Asset Value / unit (RM)

1.1372 1.0766 1.0503

Highest NAV (RM) 1.1626 1.1110 1.0566

Lowest NAV (RM) 1.0396 1.0125 1.0377

Total Return

Capital growth 3.37% 1.30% 1.40%

Income distribution

- - -

Final Distribution

Gross Distribution/unit

- - -

Net Distribution/unit

- - -

Date of Distribution

- - -

Portfolio Composition

Quoted Equity Securities

84.91% 86.43% 74.71%

Other Liquid Assets

15.09% 13.57% 25.29%

Management Expense Ratio

1.15% 0.61% 0.40%

Portfolio Turnover Ratio

0.09 times 0.07 times 0.05 times

Management Expense Ratio

The management expense ratio for the current financial period is 1.15% .

Management Expense Ratio is derived from the following calculation:

MER = (A+B+C+D+E+F+G)

x100H

A = Administration Fee

B = Distribution Fee

C = Trustee Fee

D = Performance Fee

E = Audit Fee

F = Tax Agent’s Fee

G = Other Expenses

H = Average NAV of the Fund calculated on a daily basis

The average NAV of the Fund for the financial period calculated on a daily basis is RM11,668,320.86.

Portfolio Turnover Ratio

The portfolio turnover ratio for the current financial period is 0.09 times.

The portfolio turnover ratio is derived from the following calculation:

( Total acquisition for the financial year +

Total disposal for the financial year) ÷ 2

Average NAV of the Fund for the financial year calculated on a daily basis

Where:total acquisition for the financial period = RM 795,411.92total disposal for the financial period = RM 1,293,117.53

TOTAL RETURN (in %)

Total Return is based on NAV to NAV with distribution reinvested. Below is total return of the Fund as at 30 September 2016 since inception.

3 Months

6 Months

9 Months

1 Year

2 Years

Since Inception (07 Feb 14

– 30 Sep 16)

1.65% 5.19% 3.37% 5.63% 8.27% 13.72%

Note:Total Return of the Fund is derived by this formula:

([ End of Period FY Current Year

NAV per unit ] - 1 ) x100End of Period FY

Previous Year NAV per unit

AVERAGE TOTAL RETURN (in %)

Average Total Return is derived by the formula:

Average annualised return = [ (1 + total return) (1/number of years)] - 1

07 Feb 14 – 30 September 16 (Since Inception)

4.98%

Unit prices and return may fluctuate. Past performance is not indicative of future performance.


STOCK MARKET REVIEW

ASEAN equity markets staged another solid performance with The Dow Jones Islamic Market ASEAN Total Return Index measured in Malaysian Ringgit gaining 4.17% for the third quarter of 2016. Year to date, the index is up 6.68% as investors believe that, in a post-Brexit era the ASEAN region would offer better investment return over the long-run.

Indonesia in particular had a stellar run with the index surging 7.06% as the government’s tax amnesty program yielded results above expectation. Thailand also performed well in the quarter, up 3.71% as reduced political uncertainty and healthy Q2 GDP weighed on the market. Singapore and Malaysian equity markets gained 2.71% and 0.78% respectively. On the flipside, the Philippines market, which was a top performer in the previous quarter, was the only negative performer. The Philippines Stock Exchange Index declined by 1.74% as foreign investors turned skeptical on the government’s drug-trafficking policies and President Duterte’s increasingly anti-West rhetoric.

MARKET OUTLOOK AND INVESTMENT STRATEGY

China, which ASEAN countries heavily depend on for trade, posted some encouraging data in August and September 2016. The manufacturing PMI, an index that measures the performance of the manufacturing sector, came in at 50.4 in both months, highest since November 2014. By contrast, third quarter GDP is expected to have slowed slightly to 6.6% from 6.7% earlier in the year, as China attempts to cool the soaring property market while factory employment remains sluggish.

Elsewhere, the Bank of England may cut interest rates further as the UK economy remains shaky post-Brexit and the British Pound weakened to a 31-year low. Also, the euro zone PMI survey showed that business activity has slumped to its weakest level since January 2015. By contrast, US manufacturing activity remained healthy and the economy seemed to pick up steam. This, coupled with other positive economic data, signals that rate hikes could be in the cards. Notably, crude oil prices remain volatile amidst a supply glut and lack of clarity from OPEC.

As we move forward, Brexit dynamics, China’s recovery, oil and commodity prices, the health of the US economy, and the ongoing actions of the global central banks would continue to dictate investor sentiment. The results of the upcoming US elections could also have an impact on the global markets. We continue to be cautious but will look for exciting catalysts and take appropriate long – term positions to benefit the portfolio as a whole.

ASSET ALLOCATION OF THE FUND

Sector % of NAV 30 September 2016

Cash and other liquid assets 15.09

Communications 16.05

Consumer Discretionary 14.45

Consumer Staples 9.84

Materials 12.45

Health Care 10.19

Industrials 5.05

Financials 12.10

Others 4.78

Total 100.00

FUND PERFORMANCE FROM 30 SEPTEMBER 2015 TO 30 SEPTEMBER 2016

30 Sep 16RM

30 Sep 15RM

% Change

Total NAV (Inclusive of Injection)

12,059,845 11,416,942 5.63

NAV/unit 1.1372 1.0766 5.63

TOP FIVE INVESTMENTS AS AT 30 SEPTEMBER 2016

Stock % of NAV

Telekomunikasi Indonesia 4.20

Kalbe Farma 3.84

Unilever Indonesia 3.52

Matahari Departmental Store 3.50

Syarikat Takaful Malaysia 3.28


2. STATEMENT BY THE FUND MANAGER

For the interim period ended 30 September 2016 (unaudited)

We, Monem Salam and Dato’ Dr Lee Chee Kuon, being two of the directors of Saturna Sdn Bhd, do hereby state that, in the opinion of the Manager, the accompanying financial statements are drawn up in accordance with Malaysian Financial reporting Standards and the requirements of the Securities Commission’s Guidelines on Wholesale Funds in Malaysia so as to give a true and fair view of the financial position of ASEAN Equity Fund as at 30 September 2016 and of its financial performance and cash flows for the financial period then ended on that date and comply with the requirements of the Deed.

On behalf of the Board in accordance with a resolution of the Board of Directors of the Manager,

Monem Salam Dato’ Dr. Lee Chee Kuon President, Saturna Sdn Bhd Director, Saturna Sdn BhdPortfolio Manager

Kuala Lumpur, Malaysia4 November 2016


3. STATEMENT OF FINANCIAL POSITION

Opinion

In the opinion of the Fund Manager, the financial statements have been properly drawn up in accordance with the Malaysian Securities Commission’s Guidelines on Wholesale Funds so as to give a true and fair view of the financial position of the Fund as at 30th September 2016 and of its financial performance, the changes in net asset value and the cash flows of the Fund for the period then ended.

As at 30 September 2016

As at 31 December 2015

RM RM

Investments

Financial assets at fair value through profit or loss 10,240,537 10,486,505

Shariah-based deposits 1,780,481 -

12,021,018 10,486,505

Other Assets

Amount due from stockbrokers - -

Amount due from management company - -

Cash at bank 122,663 1,229,009

Other receivable 10,981 12,541

133,644 1,241,550

Total Assets 12,154,662 11,728,055

Liabilities

Amount due to manager 83,195 46,182

Amount due to trustee 511 1,567

Other payables 11,111 13,780

94,817 61,529

Net asset value attributable to unit holders 12,059,845 11,666,526

Total equity and liabilities 12,154,662 11,728,055

Number of units in circulation 10,604,987 10,604,987

Net asset value per unit 1.1372 1.1001


4. STATEMENT OF COMPREHENSIVE INCOME

For the financial period ended 30th September 2016

1 January 2016 to 30 September 2016


RM RM

Income

Profit from short-term Shariah-based deposits 36,731 46,895

Gross dividend income 279,161 252,248

Realised foreign exchange gain/(loss) (2,771) (744)

Unrealised foreign exchange gain/(loss) 2 11

Net realised gain/(loss) on sales of investment 62,960 (10,129)

Net unrealised gain/(loss) on changes of financial asset at fair value through profit or loss 188,778 (39,123)

564,861 249,158

Expenses

Administration fee 21,741 20,854

Distribution fee 21,741 20,854

Performance fee 52,637 6,789

Trustee's fee 4,348 4,171

Auditors' fee 8,235 7,479

Tax agent's fee 3,876 2,243

Administrative fees & expenses 21,456 5,450

134,034 67,840

Net profit before taxation 430,827 181,318

Taxation (37,508) (35,044)

Net profit after taxation 393,319 146,274

Net profit after taxation is made up as follows

Realised 204,539 185,386

Unrealised 188,780 (39,112)


5. STATEMENT OF CHANGES IN NET ASSET VALUE


Unitholders’ Capital Retained Earnings Total Net Asset Value

RM RM RM

Net asset value as at 1st January 2015 10,271,620 644,948 10,916,568

Movement due to creation/(cancellation) of units during the period:

Creation of units 354,100 - 354,100

Cancellation of units - - -

Total comprehensive Income for the financial year - 146,274 146,274

Net asset value as at 30th September 2015 10,625,720 791,222 11,416,942

Unitholders’ Capital Retained Earnings Total Net Asset Value

RM RM RM

Net asset value as at 1st January 2016 10,625,720 1,040,806 11,666,526

Movement due to creation/(cancellation) of units during the period:

Creation of units - - -

Cancellation of units - - -

Total comprehensive Income for the financial year - 393,319 393,319

Net asset value as at 30th September 2016 10,625,720 1,434,125 12,059,845


6. STATEMENT OF CASH FLOWS




RM RM

Cash flows from operating activities

Proceeds from sale of investments 1,293,117 253,557

Purchase of investments (795,412) (1,340,546)

Dividend received 240,694 205,376

Profit Murabahah received 36,481 47,936

Administration fee paid (23,003) (21,513)

Audit fee paid (11,836) (11,538)

Tax Agent fee paid (5,099) (3,373)

Performance fee paid (41,869) (64,665)

Trustee's fee paid (5,404) (2,727)

Distribution fee paid - (24,501)

Payment for other fees and expenses (13,534) (2,058)

Tax Recoverable - -

Net cash generated from/(used in) operating activities 674,135 (964,052)

Cash flows from financing activities

Proceeds from issuance of units - 354,100

Payments for cancellation of units - -

Net cash generated from/(used in) from financing activities - 354,100

Net increase/(decrease) in cash and cash equivalents 674,135 (609,952)

Cash and cash equivalents at beginning of the period 1,229,009 2,199,235

Cash and cash equivalents at end of the period 1,903,144 1,589,283

Cash and cash equivalents comprise:

Cash at bank 122,663 382,080

Shariah-based deposits 1,780,481 1,207,203

1,903,144 1,589,283


7. INVESTMENTS

Financial Assets held for trading as at 30th September 2016 are as detailed below:

Quantity (Units) Cost (RM) Market Value (RM) % of NAV

Communications

Advanced Info Service 8,000 183,359 152,401 1.26

Axiata Group Bhd 39,000 255,601 203,580 1.69

DIGI.com Bhd 50,000 262,578 249,000 2.07

PLDT Inc. 1,450 305,582 212,367 1.76

Singapore Telecommunications 30,600 296,916 368,016 3.05

Telekom Malaysia 36,000 210,955 244,080 2.02

Telekomunikasi Indonesia 370,000 256,085 506,165 4.20

1,771,076 1,935,609 16.05

Consumer Discretionary

Astra Otoparts 248,000 240,901 184,196 1.53

Bangkok Airways Public Co Ltd 46,000 134,533 135,280 1.12

Jollibee Foods Corp 18,000 226,058 380,351 3.15

Matahari Department Store 72,000 321,971 422,212 3.50

Robinson Department Store 37,000 193,560 267,624 2.22

Sime Darby Bhd 15,000 133,903 114,750 0.95

Singapore Airlines 7,500 225,996 238,791 1.98

1,476,922 1,743,204 14.45

Consumer Staples

Indofood CBP Sukses Makmur 60,000 145,636 180,445 1.50

Pepsi-Cola Products Philippines 900,000 304,869 245,611 2.04

Unilever Indonesia 30,000 244,605 424,212 3.52

Universal Robina Corp 22,000 223,068 335,010 2.78

918,178 1,185,278 9.84

Energy

PTT Exploration & Production 27,000 382,301 260,391 2.16

382,301 260,391 2.16

Financials

Al-‘Aqar Healthcare REIT 147,000 203,854 221,970 1.84

Axis Real Estate Investment Trust 100,000 172,638 175,000 1.45

BIMB Holdings Bhd 21,600 80,642 89,424 0.74

Global Logistic Properties Ltd 27,000 186,809 152,954 1.27

RHT Health Trust 80,000 240,566 253,256 2.10

Sabana Shariah Compliant REIT 108,000 291,454 171,766 1.42

Syarikat Takaful Malaysia 95,000 217,157 396,150 3.28

1,393,120 1,460,520 12.10

Health Care

Chularat Hospital PCL-Foreign 450,000 139,011 140,376 1.16

IHH Healthcare Bhd 52,000 215,135 329,160 2.73

Kalbe Farma 850,000 359,896 462,697 3.84

KPJ Healthcare Bhd 70,000 249,886 296,100 2.46

963,928 1,228,333 10.19

Industrials

Gamuda Bhd 26,000 119,369 127,400 1.06

Hartalega Holdings Bhd 48,000 168,062 222,720 1.85

SIA Engineering Co Ltd 23,000 281,932 258,497 2.14

569,363 608,617 5.05

Continued on next page.


Quantity (Units) Cost (RM) Market Value (RM) % of NAV

Materials

Holcim Philippines Inc 240,000 260,253 336,721 2.79

Indocement Tunggal Prakasa 57,000 361,232 313,898 2.60

Lafarge Malaysia Berhad 30,000 267,973 237,600 1.97

Semen Indonesia (Persero) 96,000 385,976 307,756 2.55

Siam City Cement 8,700 346,316 306,612 2.54

1,621,750 1,502,587 12.45

Utilities

Manila Electric Co 11,900 228,879 315,998 2.62

228,879 315,998 2.62

Total Quoted Equity Securities 9,325,517 10,240,537 84.91

7. INVESTMENTS (continued)


8. NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL PERIOD FROM 1 JANUARY 2016 TO 30 SEPTEMBER 2016

A. THE FUND, THE MANAGER AND THEIR PRINCIPAL ACTIVITIES

ASEAN Equity Fund (hereinafter referred to as “the Fund”) was constituted pursuant to the execution of a Trust Deed dated 23 November 2015 (hereinafter referred to as “the Deed”) between the Manager, Saturna Sdn. Bhd. and the Trustee, SCBMB Trustee Berhad.

The principal activity of the Fund is to invest in a diversified portfolio of Shariah-compliant equities across the ASEAN region. The objective of the Fund is to provide long-term capital growth. The Fund’s investments comply with Shariah requirements as prescribed by its Shariah Adviser. The Fund was launched on 7 February 2014 and will continue its operations until terminated by the Trustee as provided under Part 11 of the Trust Deed.

The Manager, Saturna Sdn. Bhd. is principally engaged in funds management. The Manager is incorporated in Malaysia.

B. SHORT TERM DEPOSITS

Short-term deposits bore a weighted average effective profit rate of 3.08% per annum at the end of the reporting period. The short-term deposits have a maturity period of 3 to 31 days.

C. NET ASSET VALUE ATTRIBUTABLE TO UNITHOLDERS

2016

RM

Unitholders’ contribution 10,625,720

Retained earnings

- Realised reserve 333,482

- Unrealised reserve 1,100,643

12,059,845

Unitholders Contribution

2016

Number of Units RM

At 1 January 2016 10,604,987 10,625,720

Creation of units - -

At 30 September 2016 10,604,987 10,625,720

ASEAN Equity Fund has an approved combined fund size of 50 million units. At 30 September 2016, the unissued units amounted to 39,395,013 units. (2015: 39,395,013 units)

D. MANAGER’S FEE

The Manager is entitled to receive an administration fee of 0.25% per annum of the NAV of the Fund. The fee is accrued daily and paid monthly out of the Fund.

The Manager is also entitled to a performance fee from the daily increase in the NAV of the Fund. The performance fee is 10% of the amount by which the NAV cumulatively increases or decreases each day in the calendar year.

The Fund reimburses The Manager up to 0.25% of the average Net Assets Value per year for its marketing and distribution expenses

E. TRUSTEE’S FEE

Trustee’s fee is computed on a daily basis at 0.05% per annum of the NAV of the Fund.

(Continued on next page.)


8. NOTES TO THE FINANCIAL STATEMENTS (continued)

F. UNITS HELD BY RELATED PARTIES

30 September 2016

Number of Units Value at NAV RM

Director of the Manager 403,004 458,291

Related party to the Director of the Manager 9,982,390 11,351,837

10,385,394 11,810,128

G. TRANSACTIONS WITH INVESTMENT BANKS

Details of transactions with investment banks for the financial period from 1 January 2016 to 30 September 2016 are as follows:

Value of TradePercentage of

Total Trade Brokerage FeesPercentage of

Total Brokerage Fees

RM % RM %

CIMB Investment Bank Berhad 33,854 1.62 85 1.87

Maybank Investment Bank Berhad 181,814 8.70 363 7.99

RHB Investment Bank Berhad 1,874,755 89.68 4,094 90.14

2,090,423 100.00 4,542 100.00

H. FINANCIAL RISK MANAGEMENT POLICIES

(a) Introduction

The Fund maintains investment portfolios in a variety of listed financial instruments as dictated by its Trust Deed and investment management strategy.

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

The Fund’s objective in managing risk is the creation and protection of Unitholders’ value. Risk is inherent in the Fund’s activities, but it is managed through a process of ongoing identification, measurement and monitoring of risks. Financial risk management is also carried out through sound internal control systems and adherence to the investment restrictions as stipulated in the Trust Deed, the Securities Commission’s Guidelines on Wholesale Funds and the Capital Market and Services Act, 2007.

(b) Risk Management Structure

The Manager is responsible for identifying and controlling risks. The Board of Directors of the Manager is ultimately responsible for the overall risk management approach within the Fund.

The key feature in the Manager’s approach is that tailoring of the level of portfolio risk taken is through Tactical Asset Allocation between liquid assets and equity. At least 70% of the Fund’s NAV are to be allocated to Shariah-compliant equities in ASEAN countries and up to 30% of the Fund’s NAV are allocated to liquid assets including money market instruments and Islamic deposits with Islamic financial institutions.

To achieve its objective, the Fund invests in a diversified portfolio of Shariah-compliant equities across the ASEAN region. Asset allocation decisions are made after a review of macroeconomic and currency trends in the Southeast Asian economies.

The Fund generally follows a relative value investment style, favoring companies with potential for earnings growth. The Fund Manager analyses the direction of GDP growth, interest rates, inflation, currencies and government policies. The Fund Manager will then assess the outlook for corporate earnings and determine if there are any predictable trends. The criteria for stock selection would include improving fundamentals and growth at reasonable valuations. Stock valuation fundamentals considered are sales growth, profit margin, cash generation, earnings per share, return on equity, price earnings ratio and net tangible asset multiplies.

The Fund’s investments comply with Shariah requirements as prescribed by its Shariah Adviser.


8. NOTES TO THE FINANCIAL STATEMENTS (continued)

H. FINANCIAL RISK MANAGEMENT POLICIES (continued)

(b) Risk Management Structure (continued)

The Fund generally invests for the long-term, with annual portfolio turnover not expected to exceed 30%. The Fund will not engage in short-term trading or speculative investments.

The Fund does not invest in debt instruments and investments that might be considered higher risk compared to equities, such as derivatives.

The Fund is allowed to hold cash at the discretion of the Fund Manager and/or for defensive purposes.

(c) Market Risk

Market risk is the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in market variables such as interest rates, foreign exchange rates and equity prices. The maximum risk resulting from financial instruments equals their fair value.

(i) Interest Rate Risk

Interest rates are inclined to fluctuate over time. A rise in the general level of interest rates may affect the short-term deposits.

Cash and short-term deposits are particularly sensitive to movements in interest rates. When interest rates rise, the return on cash will rise thus affecting the NAV of the Fund.

(ii) Equity Price Risk

Equity price risk is the risk of unfavourable changes in the fair values of equities as the result of changes in the levels of equity indices and the value of individual shares. The equity price risk exposure arises from the Fund’s investments in quoted equity securities.

(iii) Currency risk

The Fund is exposed to foreign currency risk on transactions and balances that are denominated in currencies other than Ringgit Malaysia. The currencies giving rise to this risk are primarily Indonesian Rupiah (“IDR”), Philippine Peso (“PHP”), Singapore Dollar (“SGD”) and Thai Baht (“THB”). Foreign currency risk is monitored closely on an ongoing basis to ensure that the net exposure is at an acceptable level.

(iv) Credit Risk

The Fund will transact most of its investments through financial institutions including but not limited to banks, brokers and dealers. The risk is that a financial institution may default on its obligations.

The Manager manages the Fund’s credit risk by undertaking credit evaluation and close monitoring of any changes to the issuer/counterparty’s credit profile to minimise such risk. It is the Fund’s policy to enter into financial instruments with reputable counterparties. The Manager also closely monitors the creditworthiness of the Fund’s counterparties (e.g., brokers, custodian, banks, etc.).

Credit risk exposure

At the reporting date, the Fund’s maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the statement of financial position.

(v) Liquidity Risk

Investments that are relatively less liquid in nature can cause their value and hence the value of the Fund to drop. The Fund may not be able to realise illiquid investments at the desired prices. The risk managed by careful stock or asset selection and portfolio diversification.

It is the Fund’s policy that the Manager monitors the Fund’s liquidity position on a regular basis. The Fund also manages its obligation to redeem units required to do so and its overall liquidity risk by requiring a maximum of five (5) business days notice period before redemptions.

The Manager’s policy is to always maintain a prudent and sufficient level of liquid assets so as to meet normal operating requirements and expected redemption requests by unitholders. Liquid assets comprise cash, deposits with financial institutions and other instruments which are capable of being converted into cash within three (3) months.


9. CORPORATE INFORMATION

The Fund ManagerSaturna Sdn Bhd (342171-V)

Registered Office16-B, Jalan Tun Mohd Fuad 1Taman Tun Dr. Ismail60000 Kuala LumpurTel: 03-77268128 Fax: 03-77279702

Business OfficeSuite 5.03, 5th Floor, Menara Atlan161B Jalan Ampang50450 Kuala LumpurTel: 03-21645303 Fax: 03-21645308

The TrusteeSCBMB Trustee Berhad (1005793-T)

Board of DirectorsNicholas F. Kaiser (Chairman)Monem A. SalamDato’ Dr. Lee Chee KuonDato’ Dr. Vaseehar HassanMd. Noor Bin Haji A.Rahman

Investment CommitteeNicholas F. Kaiser (Chairman)Monem A. SalamDato’ Dr. Lee Chee KuonScott F. KlimoPadharmendren Annadorai Dharmen

Shariah AdvisorAmanie Advisors Sdn Bhd

Company SecretaryFulcrum Management Sdn Bhd (MAICSA 0868925)

Auditors & Reporting AccountantsCrowe Horwath AF 1018

Tax AdvisorCrowe Horwath KL Tax Sdn Bhd

SolicitorsWei Chien & Partners

Banker Standard Chartered Saadiq Berhad (823437K)

asean equity fund - saturna.com.my · malaysian ringgit will remain unchanged after the...

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