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ANNUAL REPORT

For the Financial Year Ended 30 September 2015

KENANGA BLUE CHIP FUND

Kenanga Investors Berhad (353563-P)

KENANGA BLUE CHIP FUND

Contents Page

Corporate Directory ii

Directory of Manager’s Offi ces iii

Fund Information 1

Manager’s Report 2 - 5

Fund Performance 6 - 8

Trustee’s Report 9

Independent Auditors’ Report 10 - 11

Statement by the Manager 12

Financial Statement 13 - 39

ii Kenanga Blue Chip Fund Annual Report

CORPORATE DIRECTORY

MANAGER: KENANGA INVESTORS BERHAD (Company No. 353563-P) REGISTERED OFFICE BUSINESS OFFICEKenanga Investors Berhad (KIB) Suite 12.02, 12th Floor, Kenanga International,8th Floor, Kenanga International, Jalan Sultan Ismail,Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia.50250 Kuala Lumpur, Malaysia. Tel: 03-2057 3688Tel: 03-2162 1490 Fax: 03-2161 8807Fax: 03-2161 4990 E-mail: [email protected] Website: www.KenangaInvestors.com.my

BOARD OF DIRECTORS INVESTMENT COMMITTEEDatuk Syed Ahmad Alwee Alsree Dato’ Bruce Kho Yaw Huat (Chairman) (Chairman)Syed Zafi len Syed Alwee Syed Zafi len Syed Alwee (Independent Director) (Independent Member)Peter John Rayner Peter John Rayner (Independent Director) (Independent Member)Imran Devindran bin Abdullah Imran Devindran bin Abdullah (Independent Director) (Independent Member)Dato’ Bruce Kho Yaw Huat Ismitz Matthew De AlwisIsmitz Matthew De Alwis

COMPANY SECRETARY: NORLIZA ABD SAMAD (MAICSA 7011089)9th Floor, Kenanga International, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia.Tel: 03-2162 1490 Fax: 03-2161 4990 TRUSTEE: CIMB COMMERCE TRUSTEE BERHAD (Company No. 313031-A) REGISTERED OFFICE BUSINESS OFFICE Level 13, Menara CIMB Level 21, Menara CIMBJalan Stesen Sentral 2 Jalan Stesen Sentral 2Kuala Lumpur Sentral Kuala Lumpur Sentral50490 Kuala Lumpur. 50490 Kuala Lumpur.Tel: 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 Blue Chip Fund Annual Report

DIRECTORY OF MANAGER’S OFFICES

REGIONAL BRANCH OFFICES:

Kuala LumpurSuite 12.02, 12th FloorKenanga InternationalJalan Sultan Ismail50250 Kuala Lumpur, MalaysiaTel : 03-2057 3688 Fax : 03-2161 8807

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

KlangNo. 12 Jalan Batai Laut 3, Taman Intan41300 Klang, Selangor Darul EhsanTel : 03-3341 8818 / 03-3348 7889 Fax : 03-3341 8816

Penang16th Floor, Menara Boustead Penang 39, Jalan Sultan Ahmad Shah 10050 Penang. Tel : 04-227 3788 Fax : 04-210 6644

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

Johor BahruLot 11.03, 11th FloorMenara MSC Cyberport5 Jalan Bukit Meldrum80300 Johor Bahru, JohorTel : 07-223 7505 / 4798 Fax : 07-223 4802

Kuching1st Floor, No 71, Lot 7Lot 10900, Jalan Tun Jugah93350 Kuching, SarawakTel : 082-572 228 Fax : 082-572 229

Kota KinabaluA-03-11, 3rd FloorBlock A Warisan SquareJalan Tun Fuad Stephens88000 Kota Kinabalu, SabahTel : 088-447 089 / 088-448 106 Fax : 088-447 039

IpohSuite 1, 2nd Floor,63 Persiaran Greenhill,30450 Ipoh, Perak, MalaysiaTel : 05-254 7573 / 7570 Fax : 05-254 7606

Miri2nd Floor, Lot 1264,Centre Point Commercial Centre,Jalan Melayu,98000 Miri, SarawakTel : 085-416 866Fax : 085-416 866

1 Kenanga Blue Chip Fund Annual Report

1. FUND INFORMATION

1.1 Fund Name

Kenanga Blue Chip Fund (KBCF or the Fund)

1.2 Fund Category / Type

Equity / Income &Growth

1.3 Investment Objective

The Fund aims to achieve long-term capital growth through investments in companies that have relatively larger market capitalization.

1.4 Investment Strategy

The Fund will construct a diversifi ed investment portfolio that consists of fundamentally sound companies that have large market capitalization and are dividends paying. The Fund may invest up to 98% of its Net Asset Value (NAV) in such companies. These companies are generally referred to as “blue chip” companies.

1.5 Duration

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

1.6 Performance Benchmark

FTSE-Bursa Malaysia 100 Index (FBM 100)

1.7 Distribution Policy

Income (if any) will be distributed annually on a best effort basis.

1.8 Breakdown of unit holdings of KBCF as at 30 September 2015

Size of holdings No. of unitholders No. of units held 5,000 and below 1,097 2,547,282 5,001 - 10,000 445 3,169,405 10,001-50,000 598 12,172,951 50,001-500,000 96 8,812,657 500,001 and above 0 0 Total 2,236 26,702,295

2Kenanga Blue Chip Fund Annual Report

2. MANAGER’S REPORT

2.1 Explanation on whether the Fund has achieved its investment objective.

Since inception date, the Fund has appreciated by 129.88% in Net Asset Value terms, ahead of its benchmark increase of 87.47%. Thus the fund has achieved its objective of providing long term capital growth through investments in companies with larger market capitalization.

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

Performance Chart Since Launch (23/04/2004– 30/09/2015)Kenanga Blue Chip Fund vs FTSE Bursa Malaysia 100 Index

Source: Novagni Analytics and Advisory Sdn Bhd

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

The Fund’s main strategy involved investing in a dynamic mix of value and growth large cap stocks with reasonable valuation and consistent dividend payment.

2.4 The Fund’s asset allocation as at 30 September 2015 and comparison with the previous fi nancial year

Asset 30 Sept 15 30 Sept 14 Quoted investment securities 86.5% 93.2% Short term deposits and cash 13.5% 6.8%

Reason for the differences in asset allocation

As at end 30 September 2015, the Fund’s equity exposure was 86.5%. The lower equities exposure for the fi nancial year under review was due to the defensive stance taken by the fund manager.


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

Period under review Kenanga Blue Chip Fund -11.33% FTSE-Bursa Malaysia 100 Index -12.67%


The Fund registered a return of -11.33%, outperforming the benchmark FTSE Bursa Malaysia 100 Index return of -12.67%. The Fund’s outperformance compared to the benchmark was mainly attributed to its stock selection and asset allocation.

2.6 Review of the market

Market Review

The FBM KLCI Index experienced a fi erce sell-off in the fourth quarter of 2014, falling almost 10% in a short span of 10 weeks to the year low of 1673.94 points as of 16 December 2014 before ending 2014 at the higher level of 1761.25 points. The sell-off was sparked by oil price drop which plunged nearly 40% to US$57.3 per barrel in the fourth quarter of 2014. As a result of falling oil price, foreign investors turned bearish on Malaysia whose economy relies heavily on the oil & gas sector. The outfl ow from both equity and the bond markets dragged the Ringgit down to RM3.50/US$ by end 2014 from RM3.28/US$ by end September 2014.

The local market however rebounded in the fi rst quarter of 2015, driven by bargain hunting activities which coincided with the stabilising oil price. Meanwhile, global markets were boosted by a larger than expected QE programme by the European Central Bank. The FBM KLCI Index continued its rally into April 2015 to reach the year high of 1862.8 points on 21 April 2015. Thereafter, market started its downhill slide on a confl uence of negative factors. The initial concern was a potential downgrade of Malaysia’s sovereign credit rating by Fitch Rating. Fitch had earlier downgraded Malaysia’s outlook to “Negative” in July 2013. This was further exacerbated by: a) the allegations relating to a strategic development company wholly-owned by the Ministry of Finance; b) the weak corporate results report for fi rst quarter of 2015; and c) drag from Tenaga (which is an index heavyweight) share price correction on concerns that it might overpay for Edra Energy’s power assets. Contrasting the weak economic and market performance of ASEAN from April to June 2015, China and Hong Kong markets appreciated sharply on increased retail participation and high hopes for the state owned enterprises reforms. As a result, global investors rotated out from the underperforming ASEAN markets into the China and Hong Kong markets.

Global markets were later rattled by Greece by end June 2015 as the country shut its banking system for 6 days and imposed capital controls to stem fund outfl ows. In an unexpected move, Fitch announced on 30 June 2015 that it had affi rmed Malaysia’s sovereign credit rating at “A-” while the outlook was upgraded to “Stable” from “Negative” on the back of the country’s improving fi scal position from GST implementation and fuel subsidy reforms. Unfortunately the surprise upgrade did not provide any cheer to the market which continued to drop along with the weakening Ringgit.


2.6 Review of the market (Contd.)

Market Review (Contd.)

In the domestic front, the cabinet reshuffl ing by end July 2015 raised worries on political uncertainties. Malaysia’s foreign reserve also fell to a low of US$94.5 billion in mid-August mainly attributed to capital outfl ows and possible Bank Negara’s intervention in the forex market to defend Ringgit. Not helping was another set of poor corporate earnings for the second quarter, with about 50% companies reporting results below expectation and only 10% surprising on the upside, bringing the weakest hit/miss earnings ratio in the last 16 quarters. In the global front, China shocked the world in its sudden move of devaluing RMB by 2% in August 2015. This is the fi rst devaluation since 1994 and the largest RMB devaluation in two decades. The devaluation sparked concerns of a decelerating Chinese economy and potential competitive currency devaluation amongst emerging countries to fi ght for exports. Oil price dipped to the year low of US$42.7 per barrel in August 2015 on global growth concerns while the Ringgit weakened to RM4.19/US$ by end August 2015. Both domestic and global markets fell sharply in August before chalking some recovery towards end September. Market sentiment also improved in September 2015 after the Federal Reserve’s decision to keep interest rate unchanged. The FBM KLCI Index fell to the year low of 1532.14 points on 24 August 2015 but rebounded to close 30 September 2015 at 1621.04 points.

The cumulative net foreign selling in the domestic equities reached RM17.7 billion for the fi rst nine months of 2015, way above RM6.9 billion total net selling in 2014. Foreign shareholdings have therefore declined to 22.3% as of end September 2015 from 23.8% as of end 2014.

Market Outlook We believe near term market is likely to stay range-bound given the lack of catalysts

and muted corporate earnings growth. External headwinds including a potential interest rate hike by the Federal Reserve, slowdown in China and weak commodities prices will continue to weigh on the Ringgit and the local equity market. Locally consumer sentiment and retail sales are weak post implementation of GST.

Despite the external challenges, the government remains steadfast on the path of fi scal consolidation. Government’s 2016 revenue shortfall from the oil & gas sector will be offset by GST collection which was better-than-expected. Other positives to expect in 2016 include roll out of more infrastructure projects, increased BR1M hand-outs and construction of more affordable and PR1MA housings.

In view of the abovementioned headwinds, market upside is likely to be capped. However the upcoming RM20b injection into ValueCap in a few tranches will cushion further downside for the market. Balancing the headwinds and the domestic pump-priming efforts by the government to support consumption and growth suggest a range-bound market in the foreseeable future.


2.6 Review of the market (Contd.)

Strategy

Our fund strategy remains to be defensively positioned but active in good stock picking as it is key to outperformance. We continue to adopt a barbell strategy of holding a good balance of defensive/dividend stocks and beta/cyclical stocks. Sector and stock selection wise, we like construction sector which is a benefi ciary of infrastructure projects roll-out, utility sector with defensive earnings and dividend yield and selective companies with export or US dollar earnings. We will look to increase equity exposure on sharp market weakness.

2.7 Income Distribution

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

2.10 Circumstances that materially affect any interests of the unitholders During the fi nancial year under review, there were no circumstances that materially

affected any interests of the unitholders. 2.11 Rebates & Soft commissions Any rebates received are channeled back to the Fund. On the other hand, soft

commissions received from the stockbrokers for goods and services such as technical analysis software, fundamental database, fi nancial wire services, stock quotation system and portfolio management software incidental to investment management of the Fund shall be retained by the Manager. For the fi nancial year under review, the Manager has received soft commissions from stockbrokers.


3. FUND PERFORMANCE

3.1 Details of portfolio composition of Kenanga Blue Chip Fund (“the Fund”) for the last 3 fi nancial years as at 30 September are as follows:

a. Distribution among industry sectors and category of investments:

FY FY FY 2015 2014 2013 % % %

Trading/Services 31.3 37.7 33.5 Finance 22.4 24.0 24.3 Constructions 8.2 3.0 1.4 Consumer products 6.2 7.1 8.1 Infrastructure 5.4 5.2 6.1 Plantations 4.7 3.5 3.5 Properties 4.5 9.1 3.6 Industrial products 1.7 2.5 4.9 REITs 2.1 1.1 0.9 Short term deposits and cash 13.5 6.8 13.7 100.0 100.0 100.0

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

b. Distribution among markets

The Fund invested in local equities and cash instruments only.


3.2 Performance details of the Fund for the last 3 fi nancial years ended 30 September are as follows:

FY FY FY 2015 2014 2013

Net asset value (“NAV”) (RM Million) 17.31* 21.16 23.07 Units in circulation (Million) 26.74 28.98 33.83 NAV per unit (RM) 0.6473* 0.7300 0.6819 Highest NAV per unit (RM) 0.7354 0.7352 0.6946 Lowest NAV per unit (RM) 0.6156 0.6784 0.5913 Total return (%) -11.33 7.05 12.67 - Capital growth (%) -11.33 7.05 12.67 - Income growth (%) - - - Gross distribution per unit (sen) - - - Net distribution per unit (sen) - - - Management expense ratio (“MER”) (%) 1 1.85 1.84 1.80 Portfolio turnover ratio (“PTR”) (times) 2 0.20 0.31 3.84

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 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 current fi nancial year under review.

1 MER is slightly higher against previous fi nancial year mainly due to decrease in

the average fund size during the fi nancial year under review.

2 PTR is lower against previous fi nancial year mainly due to lower trading activities and a lower equity exposure due to defensive positioning.

* Based on bid price fair valuation method on all investments held by the Fund as at 30 September 2015, the NAV and NAV per unit would be RM17.26 million and RM0.6450 respectively.

(As disclosed under Note 12 of the fi nancial statements)


3.3 Average total return of the Fund

1 Year 3 Years 5 Years 30 Sep 14 30 Sep 12 30 Sep 10 - 30 Sep 15 - 30 Sep 15 - 30 Sep 15

Kenanga Blue Chip Fund -11.33% 6.96% 18.19% FTSE-Bursa Malaysia 100 Index -12.67% -0.24% 13.81%


3.4 Annual total return of the Fund

Period under review 1 Year 1 Year 1 Year 1 Year 30 Sep 14 30 Sep 13 30 Sep 13 30 Sep 13 30 Sep 13 -30 Sep 15 -30 Sep 14 -30 Sep 13 -30 Sep 12 -30 Sep 11

Kenanga Blue Chip Fund -11.33% 7.05% 12.67% 13.40% -2.56% FTSE-Bursa Malaysia 100 Index -12.67% 3.98% 9.86% 18.31% -3.57%


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 UNITHOLDERS OF KENANGA BLUE CHIP FUND

We, CIMB COMMERCE TRUSTEE BERHAD (“the Trustee”), being the Trustee of KENANGA BLUE CHIP FUND (“the Fund”) are of the opinion that KENANGA INVESTORS BERHAD (“the Manager”), acting in the capacity of Manager of the Fund, has fulfi lled its duties in the following manner for the fi nancial year ended 30 September 2015.

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

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

b) Valuation/pricing of units of 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 Operating Offi cer

Kuala Lumpur, Malaysia 23 November 2015


5. INDEPENDENT AUDITORS’ REPORT TO THE UNITHOLDERS OF KENANGA BLUE CHIP FUND

Report on the fi nancial statements

We have audited the fi nancial statements of Kenanga Blue Chip Fund (“the Fund”), which comprise the statement of fi nancial position as at 30 September 2015 and the statement of comprehensive income, statement of changes in net asset value and statement of cash fl ows for the fi nancial year then ended, and a summary of signifi cant accounting policies and other explanatory information, as set out on pages 13 to 39.

Manager’s and Trustee’s responsibility for the fi nancial statements and fair presentation

The Manager of the Fund is responsible for the preparation of fi nancial statements so as to 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 that are free from material misstatement, whether due to fraud or error. The Trustee is 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’ responsibility

Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Fund’s preparation of fi nancial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by the Manager, as well as evaluating the overall presentation of the fi nancial statements.

We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.


5. INDEPENDENT AUDITORS’ REPORT TO THE UNITHOLDERS OF KENANGA BLUE CHIP FUND (CONTD.)

Opinion

In our opinion, the fi nancial statements give a true and fair view of the fi nancial position of the Fund as at 30 September 2015 and of its fi nancial performance, changes in net asset value and cash fl ows for the fi nancial year then ended in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards.

Other matters

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

Ernst & Young Chan Hooi Lam AF: 0039 No. 2844/02/16(J) Chartered Accountants Chartered Accountant

Kuala Lumpur, Malaysia

23 November 2015


6. STATEMENT BY THE MANAGER

I, Ismitz Matthew De Alwis, being the director of Kenanga Investors Berhad, do hereby state that, in the opinion of the Manager, the accompanying statement of fi nancial position as at 30 September 2015 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 30 September 2015 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 Blue Chip Fund as at 30 September 2015 and of its fi nancial performance and cash fl ows for the 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

Kuala Lumpur, Malaysia

23 November 2015

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

Kenanga Blue Chip Fund Annual Report13

7. FINANCIAL STATEMENT

7.1 STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2015

Note 2015 2014 RM RM

INVESTMENT INCOMEDividend income 503,868 673,456Interest income 76,946 54,798Net (loss)/gain from investments: - Financial assets at fair value through profi t or loss (“FVTPL”) 4 (2,460,705) 1,188,529 (1,879,891) 1,916,783

EXPENSESManager’s fee 5 302,061 336,306Trustee’s fee 6 13,641 17,492Auditors’ remuneration 8,500 8,500Tax agent’s fee 2,900 7,988Administration expenses 32,849 27,976 359,951 398,262

NET (LOSS)/INCOME BEFORE TAX (2,239,842) 1,518,521

Income tax 7 4,746 3,902

NET (LOSS)/INCOME AFTER TAX, REPRESENTING TOTAL COMPREHENSIVE (LOSS)/INCOME FOR THE YEAR (2,235,096) 1,522,423

Net (loss)/income after tax is made up as follows: Realised gain 326,610 1,185,116 Unrealised(loss)/gain 4 (2,561,706) 337,307 (2,235,096) 1,522,423


Kenanga Blue Chip Fund Annual Report 14

7.2 STATEMENT OF FINANCIAL POSITION AS AT 30 SEPTEMBER 2015


INVESTMENTFinancial assets at FVTPL 4 14,621,014 19,591,995Short term deposits 8 2,274,000 1,410,000 16,895,014 21,001,995

OTHER ASSETSAmount due from Manager 150,119 -Other receivables 9 324,010 85,900Tax recoverable 105,391 100,645Cash at bank 10,985 10,656 590,505 197,201

TOTAL ASSETS 17,485,519 21,199,196

LIABILITIESAmount due to Manager - 62,600Amount due to Trustee 987 1,221Other payables 10 238,866 27,690TOTAL LIABILITIES 239,853 91,511

EQUITYUnitholders’ contribution 11,850,697 13,477,620Retained earnings 5,394,969 7,630,065NET ASSET VALUE (“NAV”) ATTRIBUTABLE TO UNITHOLDERS 11 17,245,666 21,107,685

TOTAL EQUITY AND LIABILITIES 17,485,519 21,199,196

NUMBER OF UNITS IN CIRCULATION 11(a) 26,739,062 28,987,656

NET ASSET VALUE PER UNIT (RM) 12 0.6450 0.7282


Kenanga Blue Chip Fund Annual Report15

7.3 STATEMENT OF CHANGES IN NET ASSET VALUE FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2015

Unitholders’ Retained Total Note contribution earnings NAV

RM RM RM

2015At beginning of the year 13,477,620 7,630,065 21,107,685Total comprehensive loss - (2,235,096) (2,235,096)Creation of units 11(a) 1,818,718 - 1,818,718Cancellation of units 11(a) (3,427,949) - (3,427,949)Distribution equalisation 11(a) (17,692) - (17,692)At end of the year 11,850,697 5,394,969 17,245,666

2014At beginning of the year 16,915,483 6,107,642 23,023,125Total comprehensive income - 1,522,423 1,522,423Creation of units 11(a) 7,357,168 - 7,357,168Cancellation of units 11(a) (10,732,955) - (10,732,955)Distribution equalisation 11(a) (62,076) - (62,076)At end of the year 13,477,620 7,630,065 21,107,685


Kenanga Blue Chip Fund Annual Report 16

7.4 STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2015

2015 2014 RM RM

CASH FLOWS FROM OPERATING AND INVESTING ACTIVITIES

Proceeds from sale of fi nancial assets at FVTPL 4,808,205 7,287,834Purchase of fi nancial assets at FVTPL (2,363,929) (5,957,107)Dividend received 539,536 705,363Interest from deposits received 76,864 54,927Manager’s fee paid (307,227) (338,778)Trustee’s fee paid (13,875) (17,751)Auditors’ remuneration paid (8,500) (6,000)Tax agent’s fee paid (3,400) (6,788)Payment for other fees and expenses (28,869) (33,286)Cash generated from operating and investing activities 2,698,805 1,688,414Income tax refund - 23,206Net cash generated from operating and investing activities 2,698,805 1,711,620

CASH FLOWS FROM FINANCING ACTIVITIES

Cash received from units created 1,662,749 7,436,849Cash paid on units cancelled (3,497,225) (10,852,504)Net cash used in fi nancing activities (1,834,476) (3,415,655)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 864,329 (1,704,035)CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR 1,420,656 3,124,691CASH AND CASH EQUIVALENTS AT END OF THE YEAR 2,284,985 1,420,656

Cash and cash equivalents comprise: Cash at bank 10,985 10,656 Short term deposits 2,274,000 1,410,000 2,284,985 1,420,656


7.5 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2015

1. THE FUND, THE MANAGER AND THEIR PRINCIPAL ACTIVITIES

Kenanga Blue Chip 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, which in turn is a wholly-owned subsidiary of K & N Kenanga Holdings Berhad that is listed on the Main Board of Bursa Malaysia Securities Berhad. All of these companies are incorporated in Malaysia.

The principal place of business of the Manager is Suite 12.02, 12th Floor, Kenanga International, Jalan Sultan Ismail, 50250 Kuala Lumpur.

The Fund seeks to provide unitholders with long term capital growth through investments in companies that have relatively larger market capitalisation. Such companies are characterised by large-scale operations, strong fi nancial and business track records and are leaders in their respective fi elds that generally referred to as “blue chip” companies.

The fi nancial statements were authorised for issue by the Chief Executive Offi cer of the Manager on 23 November 2015.

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 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 unitholders, consistent with the long term objectives of the Fund.


2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) a. Market Risk Market risk is the risk that the fair value or future cash fl ows of a fi nancial asset

at FVTPL will fl uctuate because of changes in market prices. Market risk includes interest rate risk and price risk.

Market risk arises when the value of the investments fl uctuate 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

The risk refers to how the changes in the interest rate environment would affect the performance of the Fund’s investments. Rates 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 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 assets and liabilities are disclosed at fair value and categorised by the earlier of contractual re-pricing or maturity dates.


2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) a. Market Risk (Contd.) i. Interest rate risk (Contd.)

Interest rate risk exposure (Contd.)

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

2015 Assets Financial assets at FVTPL - 14,621,014 14,621,014 Short term deposits 2,274,000 - 2,274,000 3.30 Other assets 206 484,908 485,114 2,274,206 15,105,922 17,380,128

Liabilities Other liabilities - 239,853 239,853

Total interest rate sensitivity gap 2,274,206 14,866,069 17,140,275

2014 Assets Financial assets at FVTPL - 19,591,995 19,591,995 Short term deposits 1,410,000 - 1,410,000 3.20 Other assets 124 96,432 96,556 1,410,124 19,688,427 21,098,551

Liabilities Other liabilities - 91,511 91,511

Total interest rate sensitivity gap 1,410,124 19,596,916 21,007,040

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


2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) a. Market Risk (Contd.) ii. Price risk

Price risk is the risk of unfavorable changes in the fair values of quoted equity securities and quoted collective investment schemes. The Fund invests in quoted equity securities and quoted collective investment schemes which are exposed to price fl uctuations. This may then affect the NAV per unit of the Fund.

Price risk sensitivity

The Manager’s best estimate of the effect on the profi t for the fi nancial year due to a reasonably possible change in investments in quoted equity securities and quoted collective investment schemes with all other variables held constant is indicated in the table below:

Effect on profi t Changes in price for the year Increase/(Decrease) Increase/(Decrease) Basic Point RM

2015 Financial assets at FVTPL 5/(5) 7,311/(7,311) 2014 Financial assets at FVTPL 5/(5) 9,796/(9,796)

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 2015 2014 2015 2014 RM RM % %

Financial assets at FVTPL 14,621,014 19,591,995 84.8 92.8


2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) a. Market Risk (Contd.) ii. Price risk (Contd.)

Price risk concentration (Contd.)

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

Fair value Percentage of NAV 2015 2014 2015 2014 RM RM % %

Trading/Services 5,286,231 7,917,792 30.6 37.5 Finance 3,784,660 5,045,608 22.0 23.9 Constructions 1,383,568 637,806 8.0 3.0 Consumer products 1,058,432 1,495,668 6.1 7.1 Infrastructure 914,210 1,085,656 5.3 5.1 Plantations 789,215 745,090 4.6 3.5 Properties 770,726 1,917,583 4.5 9.1 Industrial products 285,310 522,000 1.7 2.5 REITs 348,662 224,792 2.0 1.1 14,621,014 19,591,995 84.8 92.8

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 licensed fi nancial institutions under 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 2015 2014 2015 2014 Rating % % % %

P1 100.0 100.0 3.3 6.7

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 unitholders by the Manager are cancellable at the unitholder’s option based on the Fund’s NAV per unit at the time of cancellation calculated in accordance with the Deed.

Theliquid assets comprise cash, 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.


2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) c. Liquidity Risk (Contd.)

Up to 1 year


Assets Financial assets at FVTPL 14,621,014 19,591,995 Short term deposits 2,274,000 1,410,000 Other assets 485,114 96,556 (i) 17,380,128 21,098,551

Liabilities Other liabilities (ii) 239,853 91,511

Equity (iii) 17,245,666 21,107,685

Liquidity gap (105,391) (100,645)

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 quoted equity securities and quoted collective investment schemes 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 unitholders’ 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 unitholders can request for redemption of their units, they have been categorised as having a maturity of “up to 1 year”.


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”) issued by the International Accounting Standards Board (“IASB”).

The accounting policies adopted are consistent with those of the previous fi nancial period except for the adoption of the new and amended MFRS and Interpretations Committee (“IC”) Interpretations which became effective for the Fund on 1 October 2014. The adoption of the new and amended MFRS and IC Interpretations did not have any signifi cant impact on the fi nancial position or performance of the Fund.

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

b. Standards, Amendments and Interpretations Issued But Not Yet Effective

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


3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

b. Standards, Amendments and Interpretations Issued But Not Yet Effective (Contd.)

Effective for fi nancial period beginning Description on or after

Amendments to MFRS contained in the documents entitled “Annual Improvements to MFRS 2012 - 2014 cycle” 1 January 2016 MFRS 14: Regulatory Deferral Accounts 1 January 2016 Amendments to MFRS 10, MFRS 12 and MFRS 128: Investment Entities: Applying the Consolidation Exception 1 January 2016 Amendments to MFRS 10 and MFRS 128: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture 1 January 2016 Amendments to MFRS 11: Accounting for Acquisitions of Interests in Joint Operations 1 January 2016 Amendments to MFRS 101: Disclosure Initiatives 1 January 2016 Amendments to MFRS 116 and MFRS 138: Clarifi cation of Acceptable Methods of Depreciation and Amortisation 1 January 2016 Amendments to MFRS 116 and MFRS 141: Agriculture: Bearer Plants 1 January 2016 Amendments to MFRS 127: Equity Method in Separate Financial Statements 1 January 2016 MFRS 15: Revenue from Contracts with Customers 1 January 2018 MFRS 9: Financial Instruments (IFRS 9 Financial Instruments asissued by IASB in July 2014) 1 January 2018

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, other than MFRS 9.

MFRS 9 replaces MFRS 139 on the following requirements: classifi cation and measurement of fi nancial assets and fi nancial liabilities as defi ned in MFRS 139, impairment methodology and hedge accounting. The Fund is in the process of making an assessment of the impact of this Standard.



c. Financial Assets

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.

When fi nancial assets are recognised initially, they are measured at fair value, plus, in the case of fi nancial assets not at FVTPL, directly attributable transaction costs.

The Fund determines the classifi cation of its fi nancial assets at initial recognition.

i. Financial assets at FVTPL

Financial assets are classifi ed as fi nancial assets at FVTPL if they are held for trading or are designated as such upon initial recognition.

Financial assets held for trading include quoted equity securities and quoted collective investment schemes acquired principally for the purpose of selling in the near term.

Subsequent to initial recognition, fi nancial assets at FVTPL are measured at fair value. Changes in the fair value of those fi nancial instruments are recorded in profi t or loss.

Interest earned and dividend revenue elements of such instruments are recorded separately in “interest income” and “dividend income”, respectively.

ii. Receivables

Financial assets with fi xed or determinable payments that are not quoted in an active market are classifi ed as receivables.

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

A fi nancial asset is derecognised when the contractual right to receive cash fl ows from the asset has expired. On derecognition of a fi nancial asset, the difference between the carrying amount and the sum of the consideration received is recognised in profi t or loss.



d. Impairment of Financial Assets

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

To determine whether there is objective evidence that an impairment loss on fi nancial assets has been incurred, the Fund considers factors such as the probability of insolvency or signifi cant fi nancial diffi culties of the debtor and default or signifi cant delay in payments.

If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash fl ows discounted at the fi nancial asset’s original effective rate of return. The impairment loss is recognised in profi t or loss.

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

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

e. 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 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.

f. Cash and Cash Equivalents

For the purposes of the statement of cash fl ows, cash and cash equivalents include cash at bank and short term deposits with licensed fi nancial institutions.



g. 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.

h. Unrealised Reserves

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

i. Financial Liabilities

Financial liabilities are classifi ed according to the substance of the contractual arrangements entered into and the defi nitions of a fi nancial liability.

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

A fi nancial liability is derecognised when the obligation under the liability is extinguished. Gains and losses are recognised in profi t or loss when the liabilities are derecognised, and through the amortisation process.

j. Unitholders’ Contribution – NAV Attributable to Unitholders

The unitholders’ 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 unitholders by way of distribution and/or adjusted accordingly when units are released back to the Trustee.

k. 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.

l. Distribution

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



m. 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

2015 2014 RM RM

Financial assets held for trading, at FVTPL: Quoted equity securities 14,272,352 19,367,203 Quoted collective investment schemes 348,662 224,792 14,621,014 19,591,995

Net (loss)/gain on fi nancial assets at FVTPL comprised: Realised gain on disposals 101,001 851,222 Unrealised changes in fair values (2,561,706) 337,307 (2,460,705) 1,188,529


4. FINANCIAL ASSETS AT FVTPL (CONTD.) Details of fi nancial assets at FVTPL as at 30 September 2015:

Aggregate Fair Percentage Quantity cost Value of NAV RM RM %

Quoted equity securities

Trading/Services AEON Co. (M) Berhad 52,100 187,228 140,149 0.8 Axiata Group Berhad 140,256 867,464 806,472 4.7 Bumi Armada Berhad 144,600 265,912 133,755 0.8 Dialog Group Berhad 247,100 434,956 392,889 2.3 Genting Berhad 49,400 492,120 354,692 2.0 Genting Malaysia Berhad 18,000 71,696 73,260 0.4 Maxis Berhad 54,800 366,744 358,940 2.1 MISC Berhad 10,000 86,385 87,000 0.5 SapuraKencana Petroleum Berhad 116,500 379,338 217,855 1.3 Sime Darby Berhad 79,780 742,047 615,902 3.5 Telekom Malaysia Berhad 88,281 484,847 589,717 3.4 Tenaga Nasional Berhad 126,300 924,998 1,515,600 8.8 1,127,117 5,303,735 5,286,231 30.6

Finance Alliance Bank Malaysia Berhad 100,000 497,493 334,000 1.9 BIMB Holdings Berhad 143,660 527,576 574,640 3.3 CIMB Group Holdings Berhad 11,000 49,884 49,060 0.3 Hong Leong Financial Group Berhad 25,000 435,434 348,000 2.0 Malayan Banking Berhad 182,627 1,678,369 1,561,461 9.1 Public Bank Berhad 21,200 400,210 371,000 2.2 RHB Capital Berhad 92,314 803,848 546,499 3.2 575,801 4,392,814 3,784,660 22.0

Constructions Gamuda Berhad 132,600 610,811 580,788 3.3 IJM Corporation Berhad 248,000 825,840 788,640 4.6 Sunway Construction Group Berhad 12,190 13,409 14,140 0.1 392,790 1,450,060 1,383,568 8.0

Consumer products British American Tobacco (M) Berhad 3,900 225,721 235,248 1.4 Guiness Anchor Berhad 34,800 662,223 470,496 2.7 UMW Holdings Berhad 46,900 595,914 352,688 2.0 85,600 1,483,858 1,058,432 6.1

Infrastructure DiGi.Com Berhad 140,500 686,042 779,775 4.5 Malakoff Corp Berhad 83,500 151,803 134,435 0.8 224,000 837,845 914,210 5.3


4. FINANCIAL ASSETS AT FVTPL (CONTD.)

Details of fi nancial assets at FVTPL as at 30 September 2015 (Contd.):

Aggregate Fair Percentage Quantity cost Value of NAV RM RM %

Quoted equity securities (Contd.)

Plantations Genting Plantations Berhad 10,900 110,330 108,019 0.6 IOI Corporation Berhad 95,900 379,429 387,436 2.3 Kuala Lumpur Kepong Berhad 13,600 287,204 293,760 1.7 120,400 776,963 789,215 4.6

Properties S P Setia Berhad 122,775 408,145 386,741 2.3 Sunway Berhad 121,900 361,975 383,985 2.2 244,675 770,120 770,726 4.5

Industrial products Cahya Mata Sarawak Berhad 55,400 233,602 285,310 1.7

Total quoted equity securities 2,825,783 15,248,997 14,272,352 82.8

Quoted collective investment schemes Pavilion Real Estate Investment Trust 89,200 137,765 132,908 0.8 Sunway Real Estate Investment Trust 140,100 219,120 215,754 1.2

Total quoted collective investment schemes 229,300 356,885 348,662 2.0

Total fi nancial assets at FVTPL 15,605,882 14,621,014 84.8

Unrealised loss on fi nancial assets at FVTPL (984,868)


5. MANAGER’S FEE

The Manager’s fee is computed 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 (2014: 1.55% per annum).

6. TRUSTEE’S FEE

Pursuant to the Eighth Supplemental Deed dated 25 July 2014, the Trustee’s fee is computed at a rate not exceeding 0.07% per annum of the NAV of the Fund and subject to a minimum fee of RM9,000 effective from 1 August 2014. Prior to 1 August 2014, the Trustee’s fee was computed at a rate not exceeding 0.20% per annum and subject to a minimum fee of RM18,000.

The Trustee’s fee is currently computed at 0.07% per annum of the NAV of the Fund (2014: 0.07% per annum).

7. INCOME TAX

Income tax is calculated at the Malaysian statutory tax rate of 25% of the estimated assessable income for the fi nancial year. The statutory tax rate will be reduced to 24% effective year of assessment 2016.

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)/income before tax at the statutory income tax rate to income tax expense at the effective income tax rate of the Fund is as follows:

2015 2014 RM RM

Net (loss)/income before tax (2,239,842) 1,518,521 Tax at Malaysian statutory tax rate of 25% (2014: 25%) (559,961) 379,630 Tax effect of: Income not subject to tax (170,454) (468,796) Loss not deductible for tax purposes 640,427 - Expenses not deductible for tax purposes 7,265 7,593 Restriction on tax deductible expenses for unit trust fund 82,723 82,773 Over provision in prior year (4,746) (5,102) Income tax for the year (4,746) (3,902)

8. SHORT TERM DEPOSITS

Short term deposits are held with licensed fi nancial institutions in Malaysia, on a daily renewal basis at the prevailing interest rate.


9. OTHER RECEIVABLES

2015 2014 RM RM

Amount due from stockbrokers 273,696 - Interest receivable from short term deposits 206 124 Dividend receivable 50,108 85,776 324,010 85,900

10. OTHER PAYABLES

2015 2014 RM RM

Amount due to stockbrokers 207,995 - Accrual for auditors’ remuneration 8,500 8,500 Accrual for tax agent’s fees 4,000 4,500 Provision for printing and other expenses 18,371 14,690 238,866 27,690

11. NET ASSET VALUE ATTRIBUTABLE TO UNITHOLDERS

NAV attributed to unitholders is represented by:


Unitholders’ contribution (a) 11,850,697 13,477,620 Retained earnings: Realised reserves 6,379,837 6,053,227 Unrealised reserves (984,868) 1,576,838 5,394,969 7,630,065 17,245,666 21,107,685

(a) Unitholders’ contribution

2015 2014 No. of units RM No. of units RM

At beginning of the year 28,987,656 13,477,620 33,830,966 16,915,483 Add: Creation of units 2,640,139 1,818,718 10,657,084 7,357,168 Less: Cancellation of units (4,888,733) (3,427,949) (15,500,394) (10,732,955) Distribution equalisation - (17,692) - (62,076) At end of the year 26,739,062 11,850,697 28,987,656 13,477,620

The number of units legally or benefi cially held by the Manager, Kenanga Investors Berhad, and parties related to the Manager as at 30 September 2015 were nil (2014: nil).


12. NET ASSET VALUE PER UNIT

In line with the adoption of MFRS 139, fi nancial 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 unitholders 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 unitholders for creation/cancellation of units and the NAV attributable to unitholders per the fi nancial statements is as follows:

2015 2014 RM RM/Unit RM RM/Unit

NAV attributable to unitholders for creation/cancellation of units 17,308,373 0.6473 21,160,368 0.7300 Effects of adopting bid prices as fair value (62,707) (0.0023) (52,683) (0.0018) NAV attributable to unitholders per statement of fi nancial position 17,245,666 0.6450 21,107,685 0.7282

13. PORTFOLIO TURNOVER RATIO (“PTR”)

PTR for the fi nancial year is 0.20 times (2014: 0.31 times).

PTR is the ratio of average 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.

14. MANAGEMENT EXPENSE RATIO (“MER”)

MER for the fi nancial year is 1.85% (2014: 1.84%).

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.


15. TRANSACTIONS WITH STOCKBROKING COMPANIES Brokerage, stamp duty Transaction Percentage and clearing Percentage value of total fee of total RM % RM %

Kenanga Investment Bank Berhad* 1,560,699 27.2 5,158 25.5 RHB Investment Bank Berhad 1,337,887 23.3 4,471 22.1 Affi n Hwang Investment Bank Berhad 1,277,997 22.2 4,256 21.0 Alliance Investment Bank Berhad 559,054 9.7 1,882 9.3 Macquarie Capital Securities (Malaysia) Sdn Bhd 299,544 5.2 1,016 5.0 UOB Kay Hian Securities (M) SdnBhd 252,395 4.4 836 4.1 CIMB Investment Bank Berhad 230,933 4.0 1,853 9.1 Hong Leong Investment Bank Berhad 191,310 3.3 660 3.3 Public Investment Bank Berhad 38,572 0.7 128 0.6 5,748,391 100.0 20,260 100.0

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

The above transactions values are in respect of quoted equity securities and quoted collective investment schemes.

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.

16. SEGMENTAL REPORTING

a. Business Segments

In accordance with the objective of the Fund, the Fund can invest around 50% to 98% in quoted investment securities and 2% to 50% in fi xed income securities and others. The following table provides an analysis of the Fund’s revenue, results, assets and liabilities by business segments:


16. SEGMENTAL REPORTING (CONTD.)

a. Business Segments (Contd.)

Quoted investment Other securities investments Total RM RM RM

2015 Revenue Segment (loss)/income (1,956,837) 76,946 (1,879,891) Unallocated expenditure (359,951) Loss before tax (2,239,842) Income tax 4,746 Net loss after tax (2,235,096)

Assets Financial assets at FVTPL 14,621,014 - Short term deposits - 2,274,000 Other segment assets 323,804 206 Total segment assets 14,944,818 2,274,206 17,219,024 Unallocated assets 266,495 17,485,519

Liabilities Other segment liabilities representing total segment liabilities 207,995 - 207,995 Unallocated liabilities 31,858 239,853

2014 Revenue Segment income 1,861,985 54,798 1,916,783 Unallocated expenditure (398,262) Income before tax 1,518,521 Income tax 3,902 Net income after tax 1,522,423

Assets Financial assets at FVTPL 19,591,995 - Short term deposits - 1,410,000 Other segment assets 85,776 124 Total segment assets 19,677,771 1,410,124 21,087,895 Unallocated assets 111,301 21,199,196 Liabilities Unallocated liabilities 91,511

b. Geographical Segments

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


17. 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 liabilities of the Fund in the statement of fi nancial position by the class of fi nancial instrument to which they are assigned and therefore by the measurement basis.

Financial assets at Financial FVTPL Receivables liabilities Total RM RM RM RM

2015 Assets Quoted equity securities 14,272,352 - - 14,272,352 Quoted collective investment schemes 348,662 - - 348,662 Short term deposits - 2,274,000 2,274,000 Amount due from Manager - 150,119 - 150,119 Other receivables - 324,010 - 324,010 Cash at bank - 10,985 - 10,985 14,621,014 2,759,114 - 17,380,128

Liabilities Amount due to Trustee - - 987 987 Other payables - - 238,866 238,866 - - 239,853 239,853

2014 Assets Quoted equity securities 19,367,203 - - 19,367,203 Quoted collective investment schemes 224,792 - - 224,792 Short term deposits - 1,410,000 - 1,410,000 Other receivables - 85,900 - 85,900 Cash at bank - 10,656 - 10,656 19,591,995 1,506,556 - 21,098,551

Liabilities Amount due to Manager - - 62,600 62,600 Amount due to Trustee - - 1,221 1,221 Other payables - - 27,690 27,690 - - 91,511 91,511


17. 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 RM

Investments: 2015 - Quoted equity securities 14,272,352 - - 14,272,352 - Quoted collective investment schemes 348,662 - - 348,662

2014 - Quoted equity securities 19,367,203 - - 19,367,203 - Quoted collective investment schemes 224,792 - - 224,792

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

The fair value of quoted equity securities and quoted collective investment schemes are determined by reference to Bursa Malaysia Securities Berhad’s bid prices at reporting date.

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

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


18. 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.

Investor Services Center Head Offi ce, Kuala LumpurToll Free Line: 1 800 88 3737 Suite 12.02, 12th Floor, Kenanga International,Fax: +603 2057 3722 Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia.Email: [email protected] Tel: 03-2057 3688 Fax: 03-2161 8807

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