Cover QuarterlyReport Islamic Cash-BW-FAarecacapital.com/file/Quarterly Report AICF March...

Quarterly ReportMar 2020

For the Period Ended 31 March 2020

Areca Islamic Cash Fund

QUA RTERLY REPORT MA RCH 2020


Contents

CORPORATE DIRECTORY 2

MANAGER’S REPORT

Fund Information, Performance & Review 3

Market Review & Outlook 7

TRUSTEE’S REPORT 8

STATEMENT BY THE MANAGER 8

UNAUDITED FINANCIAL STATEMENTS FOR

Areca Islamic Cash Fund 9

QUARTERLY REPORT MARCH 2020


2

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

MANAGER

Areca Capital Sdn Bhd

Company No: 200601021087 (740840-D)

107, Blok B, Pusat Dagangan Phileo Damansara 1

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

46350 Petaling Jaya, Selangor

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

e-mail: [email protected]

BOARD OF DIRECTORS

Wong Teck Meng

(Chief Executive Officer Non-Independent)

Edward Iskandar Toh Bin Abdullah

(Executive Non-Independent)

Raja Datuk Zaharaton Bt Raja Dato’ Zainal Abidin

(Independent Non-Executive Chairman)

Dr. Junid Saham (Independent Non-Executive)

INVESTMENT COMMITTEE MEMBERS

Dato’ Seri Lee Kah Choon

(Independent Non-Executive)

Raja Datuk Zaharaton Bt Raja Dato’ Zainal Abidin

(Independent Non-Executive Chairman)

Dr. Junid Saham

(Independent Non-Executive)

TRUSTEE

RHB Trustees Berhad (573019-U)

Level 10, Tower 1, RHB Centre

Jalan Tun Razak

50400 Kuala Lumpur

Tel: 03-9280 5933 Fax: 03-9280 5934

AUDITOR PricewaterhouseCoopers

(LLP0014401-LCA & AF1146),

Chartered Accountants

Level 10, 1 Sentral, Jalan Rakyat

Kuala Lumpur Sentral, P O Box 10192

50706 Kuala Lumpur

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

TAX ADVISER

PricewaterhouseCoopers Taxation Services

Sdn Bhd (464731-M) Level 10, 1 Sentral, Jalan Rakyat

Kuala Lumpur Sentral, P O Box 10192 50706 Kuala Lumpur

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

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

HEAD OFFICE

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

46350 Petaling Jaya, Selangor.

Tel: 603-7956 3111, Fax: 603-7955 4111

website: www.arecacapital.com

e-mail: [email protected]

PENANG BRANCH IPOH BRANCH MALACCA BRANCH

368-2-02 Belissa Row 11A, (First Floor) 95A, Jalan Melaka Raya 24

Jalan Burma, Georgetown Persiaran Greentown 5 Taman Melaka Raya

10350 Pulau Pinang Greentown Business Centre 75000 Melaka

Tel : 604-210 2011 30450 Ipoh, Perak Tel : 606-282 9111

Fax: 604-210 2013 Tel : 605-249 6697 Fax: 606-283 9112

Fax: 605-249 6696

KUCHING BRANCH

1st Floor,Sublot3

Lot 7998,Block16

KCLD,Cha YI Goldland

Jalan Tun Jugah/Stutong 93350 Kuching Sarawak

Tel: 6082-572 472



3

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

Name of the Fund Areca Islamic Cash Fund

Fund Category/

Type

Islamic Fixed Income (Wholesale)/Income

Investment

Objective

Seek to offer investors regular income

Performance

Benchmark

Maybank Islamic 1-month REPO rate

Distribution Policy

of the Fund

At least twice a year, subject to the availability of distributable income. In

the absence of instructions to the contrary from unit holder, the Manager is

entitled to reinvest the income distributed from the Fund in additional units

of that Fund at the NAV per unit at the end of the distribution day (at ex-

distribution price) with no entry fee.

Profile of

unitholdings

* excluding units held

by the Manager

As at 31 March 2020

Size of Holding

(Units)

No. of

accounts %

No. of

units held

‘million

%

Up to 5,000 - - - -

5,001 to 10,000 1 8.33 0.01 0.02

10,001 to 50,000 - - - -

50,001 to 500,000 4 33.33 1.25 2.79

500,001 and above 7 58.34 43.59 97.19

Total* 12 100.00 44.85 100.00

Rebates & Soft

Commissions

The Manager retains soft commissions received from stockbrokers, provided

these are of demonstrable benefit to unitholders. The soft commissions may

take the form of goods and services such as data and quotation services,

computer software incidental to the management of the Fund and

investment related publications. Cash rebates, if any, are directed to the

account of the Fund. During the period under review, the Manager had not

received any soft commissions.

Inception Date 18 June 2015

Initial Offer Price RM 1.0000 per unit during the initial offer period of 1 day

Pricing Policy

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

Value per unit

Financial year end 30 September



4

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

01 .01.2020

to

31.03.2020

01.10.2019

to

31.12.2019

Net Asset Value (“NAV”)

Total Net Asset Value (RM million) 47.70 34.95

Units in circulation (million units) 44.85 33.00

NAV per unit (RM) 1.0635 1.0591

HIGHEST & LOWEST NAV

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

Highest NAV per unit (RM) 1.0661 1.0591

Lowest NAV per unit (RM) 1.0591 1.0512

ASSET ALLOCATION % of NAV

Short-term Islamic deposits 93.87 100.10

Collective Investment Schemes 6.11 -

Cash & cash equivalents 0.02 (0.10)

DISTRIBUTION

There was no distribution declared for the financial period under review.

UNIT SPLITS

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

EXPENSE/ TURNOVER

Management expense ratio (MER) (%)

Please refer to Note 2 for further information

0.12 0.09

Portfolio turnover ratio (PTR) (times)


0.34 0.40

TOTAL RETURN


Total Return (%) 0.44 0.80

- Capital Return (%) 0.44 0.80

- Income Return (%) - -

Annual Total Return (%) 1.56* 3.05*

Performance Benchmark: Average Maybank’s 1-

month REPO rate (%)

2.56*

2.51*

* Annualised for comparison purpose only

1-yr 3-yrs 5-yrs

Average Total Return per annum (%) 3.03 2.88 N/A



5

NOTES:

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

Fund) and redemption of units by the Management Company (i.e. when you redeem your units and

liquidate your investments) will be carried out at NAV per unit (the actual value of a unit). The entry/ exit

fee (if any) would be computed separately based on your net investment/ liquidation amount.

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

average net asset value calculated on a daily basis.

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

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

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

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

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

investment returns may go down, as well as up.



6

F U N D R E V I E W

For the quarter ending 31st March 2020, the Fund posted an annualised return of 1.56%

against the benchmark Maybank Islamic 1 mth Repo of 2.56%. The portfolio underperformed

the benchmark due to its exposure to other Collective Investment Schemes that were

untimely impacted by the momentary spike in domestic secondary market yields caused by

the rush into liquidity at the start of the pandemic. The Fund focuses on high level of liquidity

and invests predominantly in repos and Islamic GIA accounts. It also has a small exposure into other liquid CIS (6.11%) for diversification and liquidity.

We will continue to prioritise liquidity while gaining from the current easy monetary policy.

We will also seek opportunities through other cash fund products under Islamic Principles that

can enhance the performance of the Fund.

Investment Policy and Strategy

The Fund may invest up to 30% of its NAV in Islamic fixed income securities including Ringgit

denominated Sukuk and invest the remaining NAV in short-term Islamic money market

instruments and Islamic deposits and placement with Islamic investment account with

different maturity periods.

NAV per unit as at 31 March 2020 RM1.0635

Asset Allocation/Portfolio Composition as at 31.03.2020 31.12.2019

Short-term Islamic deposits 93.87% 100.10%

Collective Investment Schemes 6.11% -

Cash & cash equivalents 0.02% (0.10)%

Performance of Areca Islamic Cash Fund

for the financial period since commencement to 31 March 2020

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

18

/06

/20

15

18

/08

/20

15

18

/10

/20

15

18

/12

/20

15

18

/02

/20

16

18

/04

/20

16

18

/06

/20

16

18

/08

/20

16

18

/10

/20

16

18

/12

/20

16

18

/02

/20

17

18

/04

/20

17

18

/06

/20

17

18

/08

/20

17

18

/10

/20

17

18

/12

/20

17

18

/02

/20

18

18

/04

/20

18

18

/06

/20

18

18

/08

/20

18

18

/10

/20

18

18

/12

/20

18

18

/02

/20

19

18

/04

/20

19

18

/06

/20

19

18

/08

/20

19

18

/10

/20

19

18

/12

/20

19

18

/02

/20

20

Pe

rce

nta

ge

Gro

wth

Total Return of Areca Islamic Cash Fund vs Benchmark

Areca Islamic Cash Fund Maybank Islamic 1 month REPO Rate:14.35 : :12.69



7

MARKET REVIEW & OUTLOOK

The quarter initially saw positive developments in the ongoing US-China trade war when the two

nations signed the phase one trade deal in mid-January 2020. In Europe, economic sentiment continued to rise amid waning trade uncertainty. In the UK, the manufacturing Purchasing

Managers’ Index (PMI) expanded for the first time in eight months after the general election

broke the Brexit deadlock. Meanwhile in China, the economy grew by 6.1% y-o-y in 2019, the

slowest pace since 1990 but within the government’s target.

However, the positive sentiment was short lived as investors were rattled by a newly discovered

coronavirus that emerged from the city of Wuhan, in Hubei province. IHS Markit’s flash reading

for the US Composite Output Index registered the steepest contraction in more than six years

amid the COVID-19 outbreak. The worsening pandemic has resulted in governments restricting the movement of its citizens to contain the spread of infection and policymakers unveiling large-

scale stimulus measures to cushion the economic impact of the pandemic.

Some of the stimulus measures included broad Quantitative Easing (QE) programmes with

unlimited commitment to purchase US Treasuries (UST) and Mortgage-Backed Securities (MBS)

by the US Federal Reserve (Fed); EUR870 billion worth of purchases of corporate and government

bonds of the hardest hit Eurozone countries by the European Central Bank (ECB); and the cutting

of interest rates to an all-time low of 0.1% and adding GBP200 billion to its QE programme by the

Bank of England (BoE).

Meanwhile in China, total social financing surged to an all-time high as the government sought to

support the economy suffering from COVID-19. The outbreak took its toll on the Chinese

economy with the PMI for both manufacturing and non-manufacturing sectors plunging amid

factory closures and labour shortages.

FIXED INCOME MARKET REVIEW AND OUTLOOK

In the local fixed income market, total combined outstanding of Malaysian Government Securities

(MGS)/Government Investment Issues (GII) at the end of the quarter rose RM27.80 billion to

RM760.73 billion amid higher gross issuance activity.

In the secondary market, the earlier part of the quarter saw MGS yields falling to their multi-year

lows following Bank Negara Malaysia’s (BNM) Overnight Policy Rate (OPR) cut by 25 bps to 2.75% in January and the worsening COVID-19 outbreak that triggered a global bond rally.

However, MGS yields edged significantly higher from early to mid-March amid aggressive safe

haven bids for USTs by foreign investors and only started to ease in the final week as BNM

introduced various liquidity enhancement measures. BNM slashed the Statutory Reserve Ratio

(SRR) by 100 bps to 2.00% and allowed principal dealers to recognize up to RM1.00 billion worth

of MGS/GII as part of the SRR requirement. As at end of March, MGS yields across the short and

medium curve fell broadly by 10 to 33 basis points (bps) while the longer end of the curve rose

by 2 to 9 bps amid expectations of further cuts in the OPR.

Going forward, we expect gross issuance of MGS and GII for 2020 to be significantly higher than

last year in view of the widening fiscal deficit amid the shortfall in government revenue due to

low crude oil prices and the RM35 billion fiscal injection. However, we also believe that the

increase in excess liquidity as a result of further cuts in the OPR and SRR requirement will be

supportive of the local bond market.



8

T R U S T E E ’ S R E P O R T

For The Financial Period Ended 31 March 2020

To the Unit holders of Areca Islamic Cash Fund

We have acted as Trustee of Areca Islamic Cash Fund (the “Fund”) for the financial period

ended 31 March 2020. In our opinion and to the best of our knowledge, Areca Capital Sdn Bhd,

the Manager, has operated and managed the Fund in accordance with the following:

(a) limitations imposed on the investment powers of the Manager and the Trustee under the

Deed, the Securities Commission’s Guidelines on Unlisted Capital Market Products under

the Lodge And Launch Framework, the Capital Markets and Services Act 2007 and other

applicable laws;

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

requirements ;and

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

relevant regulatory requirements.

For and on behalf of the Trustee

RHB TRUSTEES BERHAD

(Company No: 573019-U)

LEE YIT CHENG

HEAD,TRUSTEES OPERATIONS

MOHD SOFIAN BIN KAMARUDDIN

VICE PRESIDENT

Kuala Lumpur

29 May 2020

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

To the Unit holders of Areca Islamic Cash Fund

We, WONG TECK MENG and EDWARD ISKANDAR TOH BIN ABDULLAH, two of the

Directors of the Manager, Areca Capital Sdn Bhd, do hereby state that in the opinion of the

Manager, the unaudited financial statements give a true and fair view of the financial position of

the Fund as of 31 March 2020, and of its financial performance and cash flows for the period

then ended in accordance with Malaysian Financial Reporting Standards, International Financial

Reporting Standard and the relevant Securities Commission Malaysia’s Guidelines in Malaysia.

For and on behalf of the Manager

ARECA CAPITAL SDN BHD

WONG TECK MENG

CEO/ EXECUTIVE DIRECTOR

EDWARD ISKANDAR TOH BIN ABDULLAH

CIO/ EXECUTIVE DIRECTOR

Kuala Lumpur

29 May 2020



9

STATEMENT OF FINANCIAL POSITION

As At 31 March 2020

31.03.2020 31.12.2019 Note RM RM

ASSETS

Cash and cash equivalents 6,567 2,890

Income distribution receivable from

collective investment scheme

18,192

-

Financial assets at fair value through profit

or loss 6 47,689,429 34,987,372

Total Assets 47,714,188 34,990,262

LIABILITIES

Accrued management fee 9,034 9,141

Accrued Trustee's fee 1,506 1,524

Audit fee - 7,500

Tax agent's fee 3,300 6,600

Other payables and accruals 4,398 13,771

Total Liabilities 18,238 38,536

Net Asset Value of the Fund

47,695,950 34,951,726

EQUITY

Unit holders’ capital 45,806,007 33,206,007

Retained earnings 1,889,943 1,745,719

Net Assets Attributable to Unitholders 47,695,950 34,951,726

Number of Units in Circulation (Unit)

44,848,749 33,001,285

Net Asset Value Per Unit (RM) 1.0635 1.0591

The accompanying Notes form an integral part of the Financial Statements.



10

STATEMENT OF COMPREHENSIVE INCOME

For The Financial Period Ended 31 March 2020 01.01.2020 01.10.2019

to to

31.03.2020 31.12.2019

Note RM RM

INVESTMENT INCOME

Profit income 245,187 289,878

Income distribution from collective

investment scheme 18,192 -

Net gain on financial assets at fair

value through profit or loss

6

(78,533)

19,679

184,846 309,557

EXPENSES

Management fee 4 25,981 27,493

Trustee's fee 5 4,330 4,582

Audit fee 1,509 -

Tax agent’s fee 1,364 -

Other expenses 7,438 1,362

40,622 33,437

NET PROFIT BEFORE TAXATION

144,224 276,120

Taxation - -

NET PROFIT AFTER TAXATION

AND TOTAL COMPREHENSIVE

INCOME FOR THE FINANCIAL

PERIOD

144,224 276,120

Net profit after taxation is made up

of the following:

Realised amount 144,224 276,120




11

STATEMENT OF CHANGES IN EQUITY


Unit holders’

capital

RM

Retained

earnings

Total

RM RM

Balance as at 1 January 2020 33,206,007 1,745,719 34,951,726

Total comprehensive income for the

financial period - 144,224 144,224

Movement in unit holder’s capital:

Creation of units arising from

applications

18,600,000

-

18,600,000 Cancellation of units (6,000,000) - (6,000,000)

Balance as at 31 March 2020 45,806,007 1,889,943 47,695,950

Balance as at 1 October 2019 34,706,007 1,469,599 36,175,606

Total comprehensive income for the

financial period

-

276,120

276,120

Movement in unit holder’s capital:

Creation of units arising from

applications

500,000

-

500,000

Cancellation of units (2,000,000) - (2,000,000)

Balance as at 31 December 2019 33,206,007 1,745,719 34,951,726




12

UNAUDITED STATEMENT OF CASH FLOWS


01.01.2020

to

01.10.2019

to

31.03.2020 31.12.2019

RM RM

Cash Flows From Operating Activities

Placement of short-term Islamic deposits with

licensed financial institutions

(26,610,000)

(14,380,000)

Purchase of unquoted sukuk (4,994,627) (6,980,321)

Proceeds from redemption/maturity of short-term

Islamic deposits with licensed financial institutions

18,802,808

22,410,335

Profit income from short-term Islamic deposits

with licensed financial institutions 266,415

482,687

Management fee paid (26,089) (26,950)

Trustee’s fee paid (4,348) (4,492)

Payment for other fees and expenses (30,482) (1,360)

Net Cash (Used in) / Generated From Operating

Activities

(12,596,323)

1,499,899

Cash Flows From Financing Activities

Proceeds from creation of units 18,600,000 500,000

Payment for cancellation of units (6,000,000) (2,000,000)

Net Cash Generated From/ (Used In) Financing

Activities

12,600,000

(1,500,000)

Net Increase /(Decrease) In Cash And Cash

Equivalents 3,677 (101)

Cash And Cash Equivalents At The Beginning

Of The Financial Period

2,890

2,991

Cash And Cash Equivalents At The End Of

The Financial Period

6,567

2,890




13

NOTES TO THE FINANCIAL STATEMENTS

1 THE FUND, THE MANAGER AND THEIR PRINCIPAL ACTIVITIES

Areca Islamic Cash Fund (“the Fund”) is a wholesale fund which was established pursuant

to the Trust Deed dated 3 June 2015 (''the Deed'') between Areca Capital Sdn Bhd as the

Manager, RHB Trustees Berhad as the Trustee and all the registered unitholders of the Fund.

The principal activity of the Fund is to invest in investments as defined under Schedule 7 of

the Deed, which include Islamic fixed income securities including Ringgit denominated

Sukuk, short-term Islamic money market instruments and Islamic deposits and placements

with Islamic investment accounts. The Fund commenced operations on 18 June 2015 and

will continue its operations until terminated by the Trustee in accordance with Part 11 of

the Deed. The objective of the Fund is to offer investors regular income.

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

2 FINANCIAL INSTRUMENTS, RISK MANAGEMENT OBJECTIVES AND POLICIES

Financial instruments of the Fund are as follows:

Financing

assets at

amortised

costs

RM

Financial

assets at fair

value through

profit or loss

RM

Total

RM

31.03.2020

Short-term Islamic deposits

with licensed financial

institutions

-

47,689,429

47,689,429

Income distribution

receivable from collective

investment scheme

18,192

-

18,192

Cash at bank 6,567 - 6,567

24,759 47,689,429 47,714,188

Financing

assets at

amortised

costs

RM

Financial

assets at fair

value through

profit or loss

RM

Total

RM

31.12.2019

Short-term Islamic deposits

with licensed financial

institutions

-

34,987,372

34,987,372

Cash at bank 2,890 - 2,890

2,890 34,987,372 34,990,262

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



14

The Fund is exposed to a variety of risks which include market risk (including interest rate

risk), credit risk, liquidity risk and capital risk.

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

Manager and adherence to the investment restrictions as stipulated by the SC Guidelines on

Unlisted Capital Markets Products under the Lodge and Launch Framework.

Market risk

a) Interest rate risk

Interest rate risk arises from the effects of fluctuations in the prevailing levels of

market interest rates on the fair value of assets and liabilities and future cash flows.

The Fund’s exposure to interest rate risk is mainly confined to short term Islamic

deposits with licensed financial institutions. The Manager overcomes this exposure by

way of maintaining short term Islamic deposits with licensed financial institutions.

The Fund’s exposure to interest rate risk associated with Islamic deposits with

licensed financial institutions is not material as the carrying value of the deposits are

held on a short term basis.

Credit risk

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

profit, principals and proceeds from realisation of Shariah-compliant investments. The

Manager manages the credit risk by undertaking credit evaluation to minimise such risk.

Credit risk arising from placements of Islamic deposits in licensed financial institutions is

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

institutions.

The settlement terms of the proceeds from the creation of units’ receivable from the

Manager and redemption of units payable to the Manager are governed by the SC

Guidelines on Unlisted Capital Markets Products under the Lodge and Launch Framework.

The following table sets out the credit risk concentrations and counterparties’ ratings of the

Fund:

Cash and

cash

equivalents

Income

distribution

receivable

from

collective

investment

scheme

Financial

assets at

fair value

through profit or

loss

Total

RM RM RM RM

31.03.2020

Finance

AAA 6,567 18,192 47,689,429 47,714,188



15

Cash and

cash

equivalents

Income

distribution

receivable

from

collective

investment

scheme

Financial

assets at

fair value

through profit or

loss

Total

RM RM RM RM

31.12.2019

Finance

AAA 2,890 - 34,987,372 34,990,262

All financial assets of the Fund are neither past due nor impaired.

Liquidity risk

Liquidity risk is the risk that the Fund will encounter difficulty in meeting its financial

obligations. The Manager manages this risk by maintaining sufficient level of Islamic liquid

assets to meet anticipated payment and cancellations of unit by unitholders. Islamic liquid

assets comprise cash at bank, short-term Islamic deposits with licensed financial

institutions and other Shariah-compliant instruments, which are capable of being converted

into cash within 7 business days.

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

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

maturity date.

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

Less than

one

month

Between

one month to

one year

Total RM RM RM

31.03.2020

Accrued management fee 9,034 - 9,034

Accrued Trustee's fee 1,506 - 1,506

Audit fee - -

Tax agent's fee - 3,300 3,300

Other payables and accruals - 4,398 4,398

Contractual undiscounted cash flows 10,540 7,698 18,238

Less

than one

month

Between

one month to

one year

Total

RM RM RM

31.12.2019

Accrued management fee 9,141 - 9,141 Accrued Trustee's fee 1,524 - 1,524

Audit fee - 7,500 7,500

Tax agent's fee - 6,600 6,600

Other payables and accruals - 13,771 13,771

Contractual undiscounted cash flows 10,665 27,871 38,536



16

Capital risk

The capital of the Fund is represented by equity consisting of unitholders’ capital and retained earnings. The amount of equity can change significantly on a daily basis as the

Fund is subject to daily subscriptions and redemptions at the discretion of unitholders.

The Fund’s objective when managing capital is to safeguard the Fund’s ability to continue

as a going concern in order to provide returns for unitholders and benefits for other

stakeholders and to maintain a strong capital base to support the development of the

Shariah-compliant investment activities of the Fund.

Fair value estimation

Fair value is defined as the price that would be received to sell an asset or paid to transfer a

liability in an orderly transaction between market participants at the measurement date (i.e.

an exit price).

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

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

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

traded price falls within the bid-ask spread. In circumstances where the last traded price is

not within the bid-ask spread, the Fund Manager will determine the point within the bid-ask

spread that is representative of the fair value.

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

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

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

using valuation techniques.

(i) Fair value hierarchy

The table below analyses financial instruments carried at fair value. The different levels

have been defined as follows:

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

• Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is,

derived from prices) (Level 2)

• Inputs for the asset and liability that are not based on observable market data (that is, unobservable inputs) (Level 3)

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

categorised in its entirety is determined on the basis of the lowest level input that is

significant to the fair value measurement in its entirety. For this purpose, the

significance of an input is assessed against the fair value measurement in its entirety. If

a fair value measurement uses observable inputs that require significant adjustment

based on unobservable inputs, that measurement is a Level 3 measurement. Assessing

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

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

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

Fund. The Fund considers observable data to be that market data that is readily

available, regularly distributed or updated, reliable and verifiable, not proprietary and

provided by independent sources that are actively involved in the relevant market.

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

(by class) measured at fair value:



17

Level 1 Level 2 Level 3 Total

RM RM RM RM

31.03.2020

Financial assets at fair

value through profit or

loss:

-Short-term Islamic

deposits with licensed

financial institutions

-

44,773,335

-

44,773,335

Collective investment

scheme - 2,916,094 - 2,916,094

- 47,689,429 - 47,689,429

Level 1 Level 2 Level 3 Total

RM RM RM RM

31.12.2019

Financial assets at fair

value through profit or

loss:

-Short-term Islamic

deposits with licensed

financial institutions

-

34,987,372

-

34,987,372

Financial instruments that trade in markets that are not considered to be active but are

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

supported by observable inputs are classified within Level 2. This includes short term

Islamic deposits with licensed financial institutions and collective investment schemes.

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

are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity

and/or non-transferability, which are generally based on available market information.

(ii) The carrying values of cash equivalents and all current liabilities are a reasonable

approximation of the fair values due to short term nature.

3 BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

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

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

Financial Reporting Standards (“IFRS”), as modified by financial assets at fair value through

profit or loss.

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

use of certain critical accounting estimates and assumptions that affect the reported

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

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

reported financial period. It also requires the Manager to exercise their judgment in the

process of applying the Fund’s accounting policies. Although these estimates and judgment

are based on the Manager’s best knowledge of current events and actions, actual results

may differ.



18

4 MANAGEMENT FEE

The 8th Schedule of the Deed provides that the Manager is entitled to an annual management

fee at a rate not exceeding 1.00% per annum computed daily on the net asset value of the

Fund before the deduction of the management fee and Trustee’s fee for the relevant day. The

management fee provided for in the financial statements amounted to 0.75% (31.12.2019:

0.75%) per annum for the financial period.

5 TRUSTEE’S FEE

The 9th Schedule of the Deed provides that the Trustee is entitled to an annual Trustee’s fee

at a rate not exceeding 0.05% per annum computed daily on the net asset value of the Fund

before the deduction of the management fee and Trustee’s fee for the relevant day. The

Trustee’s fee provided for in the financial statements amounted to 0.05% (31.12.2019:

0.05%) per annum for the financial period.

6 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

31.03.2020 31.12.2019

RM RM

Financial assets at fair value through profit or loss

- Short-term Islamic deposits with licensed

financial institutions*

44,773,335

34,987,372

- Collective investment schemes 2,916,094 -

47,773,335

34,987,372

* Includes profit receivable of RM109,972 (31.12.2019:RM131,120).

Net gain on financial assets at fair value through

profit or loss:

- Realised loss on disposals 5,373 19,679 - Unrealised fair value loss (83,906) -

(78,533) 19,679

Weighted average effective profits per annum and weighted average maturity of Islamic

deposits with licensed financial institutions are as follows:

31.03.2020 31.12.2019

% %

Islamic deposits with licensed financial

institutions

2.67

3.21

The Islamic deposits with licensed financial institution have an average maturity of 36 days

(31.12.2019:46 days).



19

Name of Counter

Quantity Aggregate

cost

Fair value as at

31.03.2020

Fair value as at

31.03.2020

expressed as

a percentage

of value of the

Fund Units RM RM %

Collective Investment Schemes

Ambon Islam 761,159 1,000,000 940,489 1.97

AmanahRaya Syariah Trust

Fund 1,848,087 2,000,000 1,975,605 4.14

Total collective investment

schemes 2,609,246 3,000,000 2,916,094 6.11

Accumulated unrealised

loss on collective investment

schemes at fair value

through profit or loss

(83,906)

Total collective investment

schemes at fair value

through profit or loss

2,916,094

7 TRANSACTIONS WITH DEALERS

Details of transaction with dealers for the financial period ended 31 March 2020 are as

follows:

Name of dealers

Value

of trade

Percentage

of total

trade

RM %

31.03.2020

BIMB Investment Bank Berhad 16,100,000 56.28

Malayan Banking Berhad 10,500,000 36.71

Kenanga Investment Bank Berhad 997,129 3.49

CIMB Investment Bank Berhad 997,497 3.49 Kuwait Finance House(Malaysia) Berhad 10,000 0.03

28,604,626 100.00

31.12.2019

Malayan Banking Berhad 14,380,000 67.32 Kenanga Investment Bank Berhad 6,980,321 32.68

21,360,321 100.00

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

The related parties and its relationship with the Fund are as follows:

Related party Relationship

Areca Capital Sdn Bhd The Manager

There were no units held by the Manager during the financial period.



20

9 MANAGEMENT EXPENSE RATIO (“MER”)

31.03.2020 31.12.2019

% %

MER 0.12 0.09

MER is derived from the following calculation:

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

F

A = Management fee

B = Trustee’s fee

C = Audit fee

D = Tax agent's fee

E = Other expenses

F = 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

RM34,736,745 (31.12.2019:RM36,358,571).

10 PORTFOLIO TURNOVER RATIO (“PTR”)

31.03.2020 31.12.2019

PTR (times)

0.34

0.40

PTR is derived from the following calculation:

(Total acquisition for the financial period + total disposal for the financial period) ÷ 2

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

where: total acquisition for the financial period = RM4,994,627 (31.12.2019:RM6,980,321)

total disposal for the financial period = RM18,802,808 (31.12.2019:RM22,410,335)

11 QUARTERLY ACCOUNTS

The quarterly accounts for the 3-month period ended 31 March 2020 have not been audited.

Kuching Branch1st Floor, Sublot 3, Lot 7998, Block16 KCLD, Cha Yi Goldland, Jalan Tun Jugah / Stutong93350 Kuching, SarawakT 082 572 472

Pulau Pinang Branch368-2-02 Belisa Row, Jalan Burma Georgetown, 10350 Pulau PinangT 604 210 2011 F 604 210 2013· ·

Ipoh Branch11A, (First Floor), Persiaran Greentown 5Greentown Business Centre, 30450 Ipoh, PerakT 605 249 6697 F 605 249 6696·

Melaka Branch95-A, Jalan Melaka Raya 24Taman Melaka Raya, 75000 MelakaT 606 282 9111 F 606 283 9112·

·

·

·

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