Cover AnnualReport Islamic Cash-FA - Areca...

Annual Report September 2017

For the Period Ended 30 September 2017

Areca Islamic Cash Fund

A NN UA L REPORT SEPTEMBER 2017


Contents

CORPORATE DIRECTORY 2

MANAGER’S REPORT

Fund Information, Performance & Review 3

Market Review & Outlook 7

TRUSTEE’S REPORT 9

STATEMENT BY THE MANAGER 9

SHARIAH ADVISER'S REPORT 10

AUDITORS' REPORT 11

AUDITED FINANCIAL STATEMENTS FOR

Areca Islamic Cash Fund 14

ANNUAL REPORT SEPTEMBER 2017


2

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

MANAGER

Areca Capital Sdn Bhd (740840-D)

107, Blok B, Pusat Dagangan Phileo Damansara 1

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

46350 Petaling Jaya, Selangor

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

website: www.arecacapital.com

e-mail: [email protected]

BOARD OF DIRECTORS

Dato’ Wee Hoe Soon @ Gooi Hoe Soon

(Independent, Chairman)

Wong Teck Meng (Executive)

Raja Datuk Zaharaton Bt Raja Dato’ Zainal Abidin (Non-Executive Non-Independent)

Dr. Junid Saham (Independent)

INVESTMENT COMMITTEE MEMBERS

Dato’ Wee Hoe Soon @ Gooi Hoe Soon

(Independent, Chairman)

Raja Datuk Zaharaton Bt Raja Dato’ Zainal Abidin

(Non-Independent)

Dr. Junid Saham (Independent)

TRUSTEE

RHB Trustees Berhad (573019-U)

Level 1, Tower One, RHB Centre

Jalan Tun Razak

50400 Kuala Lumpur

Tel: 03-9280 8799 Fax: 03-9280 8796

AUDITOR PricewaterhouseCoopers (AF1146)

Level 10, 1 Sentral, Jalan Travers

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

SHARIAH ADVISER

ZICO Shariah Advisory Services Sdn Bhd

(769433-D)

Level 7-6 Menara Milenium, Jalan Damanlela, Pusat Bandar

Damansara 50490 Kuala Lumpur

Tel: 03-2093 3999 Fax:03-2093 2999

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

HEAD OFFICE

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

46350 Petaling Jaya, Selangor

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

website: www.arecacapital.com e-mail: [email protected]

PENANG – PULAU TIKUS

368-2-02 Belissa Row

Jalan Burma, Georgetown

10350 Pulau Pinang

Tel : 604-210 2011

Fax: 604-210 2013

PERAK – IPOH

11A, (First Floor)

Persiaran Greentown 5

Greentown Business Centre

30450 Ipoh, Perak

Tel : 605-249 6697

Fax: 605-249 6696

MALACCA

95A, Jalan Melaka Raya 24

Taman Melaka Raya

75000 Melaka

Tel : 606-282 9111

Fax: 606-283 9112

mailto:[email protected]:[email protected]



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 30 September 2017

Size of Holding

(Units)

No. of

accounts %

No. of

units held

‘million

%

Up to 5,000 - - - -

5,001 to 10,000 - - - -

10,001 to 50,000 - - - -

50,001 to 500,000 3 37.50 0.64 1.50

500,001 and above 5 62.50 42.25 98.50

Total* 8 100.00 42.89 100.00

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 M A N C E

2017

18.6.2015

(date of launch)

to

30.9.2016

Net Asset Value (“NAV”)

Total Net Asset Value (RM million) 43.34* 47.32

Units in circulation (million units) 42.92* 45.46

NAV per unit (RM) 1.0098* 1.0409

*Ex-Distribution

HIGHEST & LOWEST NAV

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

Highest NAV per unit (RM) 1.0440* 1.0409

Lowest NAV per unit (RM) 1.0143* 1.0000

*Ex-Distribution

ASSET ALLOCATION % of NAV

Short-term Shariah-based deposits 100.08 94.38

Cash & cash equivalents (0.08) 5.62

DISTRIBUTION

Please refer to Note 2 for further information

Distribution date

31 Oct 2016

29 Sep 2017

-

-

Gross distribution (sen per unit)

3.00 (31 Oct)

3.00 (29 Sep)

-

-

Net distribution (sen per unit)

3.00 (31 Oct)

3.00 (29 Sep)

-

-

NAV before distribution (RM per unit)

1.0440 (28 Oct) 1.0397 (28 Sep)

-

-

NAV after distribution (RM per unit)

1.0143 (31 Oct)

1.0098 (29 Sep) -

-

UNIT SPLITS

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

EXPENSE/ TURNOVER for the period ended

Management expense ratio (MER) (%)


0.87

0.98

Portfolio turnover ratio (PTR) (times)


6.20

3.97



5

2017

18.6.2015

(date of launch)

to

30.9.2016

TOTAL RETURN


Total Return (%) 2.89 4.09

- Capital Return (%) (2.99) 4.09

- Income Return (%) 5.88 -

Annual Total Return (%) 2.85* 3.17*

Performance Benchmark: Average Maybank’s

1-month REPO rate (%) 2.38* 2.69*

* Annualised for comparison purpose only

1-yr 3-yrs 5-yrs

Average Total Return per annum (%) 2.89 N/A N/A

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: Net distribution of 3.00 sen per unit each were declared on 31 October 2016 and 29 September

2017 respectively and were automatically reinvested into additional units on the same day at NAV per

unit after distribution at no entry fee

Note 3: MER is calculated based on the total fees and expenses incurred by the Fund, divided by the

average net asset value calculated on a daily basis.

Note 4: PTR is computed based on the average of the total acquisitions and total disposals of the

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

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

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

from Malayan Banking Berhad.

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

investment returns may go down, as well as up.



6

F U N D R E V I E W

The NAV per unit of the Fund decreased from RM1.0409 as at 30 September 2016 to

RM1.0098 as at 30 September 2017, after a total net distribution of 6.00 sen per unit

during the year. For the year ended 30 September 2017, the Fund posted an annualized

return of 2.85% against the benchmark, Maybank Islamic 1-month REPO rate of 2.38%.

The portfolio remains highly liquid and is currently invested in Islamic GIA accounts and

repos only.

The Fund achieved its objective to offer investors regular income.

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, Islamic deposits and placement with Islamic investment account

with different maturity periods.

NAV per unit as at 30 September 2017 RM1.0098

Asset Allocation/Portfolio Composition as at 30.9.2017 30.9.2016

Cash & cash equivalents (0.08) 5.62% 5.62

Short-term Shariah-based deposits 100.08% 94.38% 9

Performance of Areca Islamic Cash Fund

for the financial period since commencement to 30 September 2017

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

Pe

rce

nta

ge G

row

th

Total Return of Areca Islamic Cash Fund vs Benchmark

Areca Islamic Cash Fund Maybank Islamic 1 month REPO Rate

Maybank Islamic 1-Month REPO Rate

Areca Islamic Cash



7

MARKET REVIEW & OUTLOOK

ECONOMIC REVIEW & OUTLOOK

The effect of UK’s rating downgrade last year was most evident in the plunge of the GB£ against

USD from 1.49 just before ‘Brexit’ to a level last seen in the mid 80’s at 1.21 in October. It has

since recovered to 1.34 on higher inflation (5-year high of 3% in September ‘17), low

unemployment rate (42-year low of 4.3% in August) and anticipated higher interest rates ahead.

Against the MYR, it fell to a low of 5.06 in October ‘16 before retracing back to 5.70 at end

September ‘17. The Bank of England (BOE) hints of scaling back Quantitative Easing program

quite like the European Central Bank (ECB).

Economically, the US has continued to show signs of recovery. Unemployment rate dropped to a

16-year low of 4.2% in September this year while housing and consumption data have been

encouraging. The Dow Jones surged past 20000 at the end of January and has frequently set new

all-time highs. It reached yet another high at end of Q32017 at 22405. It continues to ride on the

prospects of a Trump inspired expansionary fiscal plan and anticipated tax reforms. Inflation

recorded a five year high of 2.7% in February but have since hit a soft patch. Inevitably, the

hawks came out and the Federal Fund Rate was raised in March and June by a ¼% each to 1.25%

following December’s expected ¼% hike. The market remains expectant of one more hike by the

end of 2017. The Federal Reserve has also expressed their readiness to trim the Federal

Reserve’s asset portfolio of US$4.5 trillion in a gradual, non-disruptive and orderly manner.

Geopolitical risk has however ratcheted up several notches. The retaliatory bombing of Syria for

alleged usage of chemical weapons, dropping the ‘mother of all bombs’ in Afghanistan and ‘sabre-

rattling’ with North Korea are a few nervous moments. By pulling out of the Trans-Pacific

Partnership (TPP) and Paris Climate Agreement, antagonising Mexico, Australia, Canada and

NATO, Trump is isolating the US expeditiously and possibly relinquishing world leader status.

China’s last 4 quarters Gross Domestic Product (GDP) grew 6.8% (4Q2016), 6.9%, 6.9% and 6.8%

respectively. Significantly, they will hold their 19th National People’s Congress in October where

President Xi Jin Ping is said to consolidate power. In January, China’s reserves momentarily fell

below US$3 trillion mark (lowest since 2011); a result of its strategy of defending the Yuan. It

has since reclaimed the world’s top spot as of June 2017, following imposition of capital controls

on outflows and a series of US Treasuries’ buying sprees. At end of September their Reserves

stands at USD3.1 trillion. It is no surprise then that President Trump did not carry out his threat

of branding China a currency manipulator during their first four-eyed meeting in March.

In Malaysia, with little good news in the National Budget announced in October 2016, the

Malaysian Ringgit suffered from the anticipated declining interest rates differential and bad press

on issues surrounding 1MDB. The MYR depreciated to its weakest close since the end of 1998

Asian Financial Crisis early January at 4.49 to USD. Fortunately, trade data remained strong.

Exports and imports data picked up since November providing support for Q4’s 4.5% GDP growth,

bringing the full calendar year 2016 to an expansion of 4.2%. It improved this year with 5.6%

and 5.8% growth for Q1 and Q2. Meantime, inflation surged to 5.1% in March, highest since

November 2008 mainly due to higher fuel and transport cost. It has since eased to 4.3% at the

end of Q3. Foreign Reserves has steadily increased to USD101.2 billion (or RM427.7 bil from

RM404.9 bil a year ago). The upcoming General Elections will likely influence policies as a vibrant

upbeat economy is essential to maintain the status quo.



8

FIXED INCOME REVIEW AND OUTLOOK

The period under review (Oct’16 to Sep’17) saw the issuance of RM88.0 bil Malaysian

Government Securities/Government Investment Issue (MGS/GII) through 30 tender offerings vs

RM93.0 bil in the previous period (Oct ’15 – Sep ’16). In addition, there were also 13 issues

privately placed raising another RM11.5 bil. Due to negative vibes spilling over from 3Q 2016,

foreign funds left our system. 4Q 2016 saw an outflow of RM21.3 bil. Another RM37.6 bil followed

suit in Q1 2017. The trend finally reversed recording a net outflow of RM37.6 bil for this period

explaining in part the decline in MYR. Our sovereign debt held by offshore investors stands at

RM183.2 billion (27.3% of total issued) at the end of September 2017 compared to RM221.1

billion (35.0%) last September.

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

was left unchanged at 3.00% throughout.

Malaysian sovereign yield curve shifted up between 37 and 51 bps reflecting pressure from the 3

US rate hikes in this period. Pressure also came in the form of rising domestic inflation although it

has been frequently debunked as cost push rather than demand driven. These are balanced by

local factors like narrowing disposable income as well as the impending general elections and the

need to maintain a ‘feel good’ atmosphere.

Fixed income markets are expected to remain buoyant and liquid for now.

Constant Maturity Conventional Yield-To-Maturity: September 2017 vs September 2016

Tenure 1Y 3Y 5Y 7Y 10Y

Sep’16 Sep’17 Sep’16 Sep’17 Sep’16 Sep’17 Sep’16 Sep’17 Sep’16 Sep’17

MGS 2.511 2.996 2.940 3.327 3.218 3.645 3.442 3.844 3.545 3.910

AAA 3.690 3.910 3.920 4.180 4.090 4.330 4.210 4.490 4.350 4.650

AA2 4.000 4.130 4.280 4.430 4.450 4.600 4.580 4.730 4.730 4.920

A2 5.440 5.380 6.180 6.120 6.680 6.690 7.130 7.120 7.760 7.780

Source: Bond Pricing Agency Sdn Bhd (BPA)

As the economies of major countries turn for the better, it is envisaged that ultra-easy interest

rates environment may be nearing its end. The process of rates normalisation in the US while the

market expects European Union (EU) to scale back stimulus will point towards an increase in global yields. The notion of a new norm of low interest rates may still mitigate as base effects

have grown larger while new engine of growths remain elusive.



9

T R U S T E E ’ S R E P O R T

For The Financial Year Ended 30 September 2017

To the Unit holders of Areca Islamic Cash Fund

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

30 September 2017. In our opinion and to the best of our knowledge, Areca Capital Sdn Bhd,

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

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

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

Products under the Lodge and Launch Framework, the Capital Markets and Services Act

2007 and other applicable laws;

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

requirements;

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

regulatory requirements; and

(d) the distributions of 6.00 sen (gross) per unit to the unitholders during the financial year

ended 30 September 2017 are consistent with the objectives of the Fund.

For and on behalf of the Trustee

RHB TRUSTEES BERHAD (Company No: 573019-U)

TONY CHIENG SIONG UNG

DIRECTOR

LEE YIT CHENG

HEAD, TRUSTEES OPERATIONS

Kuala Lumpur

20 November 2017

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


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

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

set out on pages 14 to 30 are drawn up in accordance with the provisions of the Deed and give

a true and fair view of the financial position of the Fund as at 30 September 2017 and of its

results, changes in equity and cash flows of the Fund for the financial year ended 30 September

2017 in accordance with the Malaysian Financial Reporting Standards and International

Financial Reporting Standards.

For and on behalf of the Manager

ARECA CAPITAL SDN BHD

WONG TECK MENG

EXECUTIVE DIRECTOR

DATO’ WEE HOE SOON @ GOOI HOE SOON

INDEPENDENT DIRECTOR

Kuala Lumpur

20 November 2017



10

S H A R I A H A D V I S E R ' S R E P O R T


We have acted as the Shariah Adviser of Areca Islamic Cash Fund. Our responsibility is to

ensure that the procedures and processes employed by Areca Capital Sdn Bhd and that

provisions Trust Deed dated 3 June 2015 is in accordance with Shariah principles.

In our opinion, Areca Capital Sdn Bhd has managed and administered Areca Islamic Cash Fund in accordance with Shariah principles and complied with applicable guidelines, rulings and

decision issued by the Securities Commission Malaysia pertaining to Shariah matters for the

financial year ended 30 September 2017.

In addition, we also confirm that the investment portfolio of Areca Islamic Cash Fund comprises

instruments which have been classified as Shariah-compliant by the Shariah Advisory Council

(“SAC”) of the Securities Commission Malaysia and the SAC of Bank Negara Malaysia.

For and on behalf of the Shariah Adviser

ZICO Shariah Advisory Services Sdn Bhd

DR AIDA OTHMAN

DIRECTOR

Kuala Lumpur 20 November 2017



11

INDEPENDENT AUDITORS’ REPORT

TO THE UNITHOLDERS OF ARECA ISLAMIC CASH FUND

REPORT ON THE FINANCIAL STATEMENTS

Our Opinion

In our opinion, the financial statements of Areca Islamic Cash Fund ("the Fund") give a true and

fair view of the financial position of the Fund as at 30 September 2017, and of its financial

performance and its cash flows for the year then ended in accordance with Malaysian Financial

Reporting Standards and International Financial Reporting Standards.

What we have audited

We have audited the financial statements of the Fund, which comprise the statement of

financial position as at 30 September 2017, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes

to the financial statements, including a summary of significant accounting policies, as set out on

pages 14 to 30.

Basis for opinion

We conducted our audit in accordance with approved standards on auditing in Malaysia and

International Standards on Auditing. Our responsibilities under those standards are further

described in the “Auditors’ responsibilities for the audit of the financial statements” section of our report.

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

basis for our opinion.

Independence and other ethical responsibilities

We are independent of the Fund in accordance with the By-Laws (on Professional Ethics,

Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the

International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (“IESBA Code”), and we have fulfilled our other ethical responsibilities in

accordance with the By-Laws and the IESBA Code.

Information other than the financial statements and auditors’ report thereon

The Manager of the Fund is responsible for the other information. The other information

comprises Manager’s report but does not include the financial statements of the Fund and our

auditors' report thereon.

Our opinion on the financial statements of the Fund does not cover the other information and

we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements of the Fund, our responsibility is to read

the other information and, in doing so, consider whether the other information is materially

inconsistent with the financial statements of the Fund or our knowledge obtained in the audit or

otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of

this other information, we are required to report that fact. We have nothing to report in this regard.



12

Responsibilities of the Manager for the financial statements

The Manager of the Fund is responsible for the preparation of the financial statements of the

Fund that give a true and fair view in accordance with Malaysian Financial Reporting Standards

and International Financial Reporting Standards. The Manager is also responsible for such

internal control as the Manager determine is necessary to enable the preparation of financial

statements of the Fund that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements of the Fund, the Manager is responsible for assessing the

Fund’s ability to continue as a going concern, disclosing, as applicable, matters related to going

concern and using the going concern basis of accounting unless the Manager either intend to

liquidate the Fund or have no realistic alternative but to do so.

Auditors’ responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements of

the Fund as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of

assurance, but is not a guarantee that an audit conducted in accordance with approved

standards on auditing in Malaysia and International Standards on Auditing will always detect a

material misstatement when it exists. Misstatements can arise from fraud or error and are

considered material if, individually or in the aggregate, they could reasonably be expected to

influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with approved standards on auditing in Malaysia and

International Standards on Auditing, we exercise professional judgement and maintain

professional scepticism throughout the audit. We also:

a. Identify and assess the risks of material misstatement of the financial statements of the

Fund, whether due to fraud or error, design and perform audit procedures responsive to

those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis

for our opinion. The risk of not detecting a material misstatement resulting from fraud is

higher than for one resulting from error, as fraud may involve collusion, forgery,

intentional omissions, misrepresentations, or the override of internal control.

b. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of

expressing an opinion on the effectiveness of the Fund’s internal control.

c. Evaluate the appropriateness of accounting policies used and the reasonableness of

accounting estimates and related disclosures made by the Manager. Conclude on the

appropriateness of the Manager’s use of the going concern basis of accounting and, based

on the audit evidence obtained, whether a material uncertainty exists related to events or

conditions that may cast significant doubt on the Fund’s ability to continue as a going

concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements of the

Fund or, if such disclosures are inadequate, to modify our opinion. Our conclusions are

based on the audit evidence obtained up to the date of our auditors’ report. However,

future events or conditions may cause the Fund to cease to continue as a going concern.

d. Evaluate the overall presentation, structure and content of the financial statements of the

Fund, including the disclosures, and whether the financial statements represent the

underlying transactions and events in a manner that achieves fair presentation.



13

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

timing of the audit and significant audit findings, including any significant deficiencies in internal

control that we identify during our audit.

OTHER MATTERS

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

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

PRICEWATERHOUSECOOPERS

(No. AF: 1146)

Chartered Accountants

Kuala Lumpur

20 November 2017



14

STATEMENT OF FINANCIAL POSITION

As At 30 September 2017

30.9.2017 30.9.2016

Note RM RM

ASSETS

Financial assets at fair value through profit

or loss 9 43,375,802

44,658,775

Cash and cash equivalents 7,247 1,358

Amount due from Manager - 2,700,000

Total Assets 43,383,049 47,360,133

LIABILITIES

Accrued management fee 27,052 27,408

Accrued trustee's fee 1,803 1,844

Audit fee 6,600 6,000

Tax agent's fee 4,913 5,000

Other payables and accruals 2,771 2,414

Total Liabilities 43,139 42,666

Net Asset Value of the Fund

43,339,910

47,317,467

EQUITY

Unit holders’ capital 43,041,274 45,703,080

Retained earnings 298,636 1,614,387

Net Assets Attributable to Unitholders 43,339,910 47,317,467

Number of Units in Circulation (Unit)

10

42,918,307

45,457,483

Net Asset Value Per Unit (RM) 1.0098 1.0409

The accompanying summary of significant accounting policies and notes to the financial

statements form an integral part of these financial statements.



15

STATEMENT OF COMPREHENSIVE INCOME


30.9.2017

Financial period

from

18.6.2015

(date of

launch to

30.9.2016

Note RM RM

INVESTMENT INCOME

Profit income 4 1,738,182 1,987,487

Net gain on financial assets at fair value

through profit or loss

9

12,988

-

1,751,170 1,987,487

EXPENSES

Management fee 5 354,794 314,329

Trustee's fee 6 23,653 24,473

Audit fee 6,600 6,000

Tax agent's fee 3,800 6,860

Other expenses 24,663 21,438

413,510 373,100

NET PROFIT BEFORE TAXATION 1,337,660 1,614,387

Taxation 7 - -

NET PROFIT AFTER TAXATION AND TOTAL COMPREHENSIVE INCOME

FOR THE FINANCIAL PERIOD

1,337,660

1,614,387

Net Profit After Taxation Is Made Up As

Follows:

Realised amount 1,337,660 1,614,387





16

STATEMENT OF CHANGES IN EQUITY


Unit holders’

capital

Retained

earnings

Total

RM RM RM

Balance as at 1 October 2016 45,703,080 1,614,387 47,317,467

Total comprehensive income for the

financial period

-

1,337,660

1,337,660

Movement in unit holder’s capital:

Creation of units arising from

applications

44,545,000

-

44,545,000

Creation of units arising from distributions

2,653,411

-

2,653,411

Cancellation of units (49,860,217) - (49,860,217)

Distributions (Note 8) (2,653,411) (2,653,411)

Balance as at 30 September 2017 43,041,274 298,636 43,339,910

Balance as at 18 June 2015 (date

of launch)

- - -

Total comprehensive income for the

financial period

-

1,614,387

1,614,387

Movement in unit holder’s capital:

Creation of units arising from

applications

76,110,856

-

76,110,856

Cancellation of units (30,407,776) - (30,407,776)

Balance as at 30 September 2016 45,703,080 1,614,387 47,317,467





17

STATEMENT OF CASH FLOWS


30.9.2017

Financial

period from 18.6.2015

(date of

launch) to

30.9.2016

RM RM

Cash Flows From Operating Activities

Placement of short-term Shariah-based deposits

with licensed financial institutions

(292,869,565)

(211,901,001)

Proceed from disposal/maturity of short-term

Shariah-based deposits with licensed financial institutions

294,155,423

167,296,822

Profit income 1,748,286 1,932,891

Management fee paid (355,150) (286,921)

Trustee’s fee paid (23,694) (22,629)

Payment for other fees and expenses (34,194) (20,884)

Net Cash Generated From/(Used in) Operating

Activities 2,621,106

(43,001,722)

Cash Flows From Financing Activities

Proceeds from creation of units 49,898,411 73,410,856

Payment for cancellation of units (49,860,217) (30,407,776)

Distributions paid (2,653,411) -

Net Cash (Used In)/Generated From Financing

Activities (2,615,217)

43,003,080

Net Increase In Cash And Cash Equivalents 5,889 1,358

Cash And Cash Equivalents At The

Beginning of The Financial Year/Period 1,358

-

Cash And Cash Equivalents At The End Of

The Financial Year/Period 7,247

1,358





18

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2017

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

material in relation to the financial statements.

A BASIS OF PREPARATION OF FINANCIAL STATEMENTS

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

accordance with the provisions of the 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 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.

The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note

I.

(a) The new standards and amendments to published standards that are applicable to the

Fund but not yet effective and have not been early adopted are as follows:

(i) Financial year beginning on/after 1 October 2017

Amendments to MFRS 107 “Statement of Cash Flows - Disclosure Initiative” (effective from 1 January 2017) introduce an additional disclosure on changes

in liabilities arising from financing activities.

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

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

(ii) Financial year beginning on/after 1 October 2018

MFRS 9 “Financial Instruments” (effective from 1 January 2018) will replace

MFRS 139 “Financial Instruments: Recognition and Measurement”.

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

establishes three primary measurement categories for financial assets:

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

comprehensive income (“OCI”). The basis of classification depends on the

entity’s business model and the cash flow characteristics of the financial asset.

Investments in equity instruments are always measured at fair value through

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

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

A debt instrument is measured at amortised cost only if the entity is holding it

to collect contractual cash flows and the cash flows represent principal and

interest.

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

include amortised cost accounting for most financial liabilities, with bifurcation

of embedded derivatives. The main change is that, in cases where the fair value



19

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

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

the income statement, unless this creates an accounting mismatch.

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

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

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

occurred before credit losses are recognised.

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

a significant impact on the Fund’s financial statements.

B INCOME RECOGNITION

Profits from short-term Shariah-based deposits with licensed financial institutions are

recognised based on effective profit rate method on an accrual basis.

C TAXATION

Current tax expense is determined according to the Malaysian tax laws at the current rate

based upon the taxable profits earned during the financial period.

D FUNCTIONAL AND PRESENTATION CURRENCY

Items included in the financial statements of the Fund are measured using the currency of

the primary economic environment in which the Fund operates (the “functional currency”).

The financial statements are presented in Ringgit Malaysia, which is the Fund’s functional

and presentation currency.

E FINANCIAL ASSETS AND LIABILITIES

(i) Classification

The Fund designates its investment in Shariah-based deposits with licensed financial

institutions as financial assets at fair value through profit or loss at inception.

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

managed and their performance evaluated on a fair value basis.

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

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

assets. The Fund’s financing and receivables comprise cash and cash equivalents.

Financial liabilities are classified according to the substance of the contractual

arrangements entered into and the definitions of a financial liability.

The Fund classifies amount due to Manager, amount due to Trustee, auditors’

remuneration, tax agent’s fee and other payables and accruals as other financial

liabilities.

(ii) Recognition and measurement

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

date on which the Fund commits to purchase or sell the asset. Investments in Shariah-

based deposits with licensed financial institutions are initially recognised at fair value.

Financial liabilities, within the scope of MFRS 139, are recognised in the statement of

financial position when, and only when, the Fund becomes a party to the contractual

provisions of the financial instrument.

Financial assets are de-recognised when the rights to receive cash flows from the

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

substantially all risks and rewards of ownership.

Financial liabilities are de-recognised when it is extinguished, i.e. when the obligation

specified in the contract is discharged or cancelled or expired.



20

Shariah-based deposits with licensed financial institutions are stated at cost plus

accrued profit calculated on the effective profit method over the year from the date of

placement to the date of maturity of the Shariah-based deposits which is a reasonable

estimate of fair value due to their short term nature.

Financing and receivables and other liabilities are subsequently carried at amortised

cost using the effective profit method.

(iii) Impairment of assets carried at amortised costs

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

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

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

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

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

and that loss event (or events) has an impact on the estimated future cash flows of the

financial asset or group of financial assets that can be reliably estimated.

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

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

losses that have not been incurred) discounted at the financial asset’s original effective

profit rate. The asset’s carrying amount of the asset is reduced and the amount of the

loss is recognised in profit or loss. If ‘financing and receivables’ or a ‘held to maturity

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

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

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

instrument’s fair value using an observable market price.

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

decrease can be related objectively to an event occurring after the impairment was

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

previously recognised impairment loss is recognised in statement of comprehensive

income.

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

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

the amount of the loss has been determined.

F CASH AND CASH EQUIVALENTS

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

bank which is subject to an insignificant risk of changes in value.

G UNITHOLDER’S CAPITAL

The unitholders’ contributions to the Fund meet the criteria to be classified as equity

instruments under MFRS 132 “Financial Instruments: Presentation”. Those criteria include:

the units entitle the holder to a proportionate share of the Fund’s net assets value;

the units are the most subordinated class and class features are identical;

there is no contractual obligations to deliver cash or another financial asset other than

the obligation on the Fund to repurchase; and

the total expected cash flows from the units over its life are based substantially on the

profit or loss of the Fund.

The outstanding units are carried at the redemption amount that is payable at each financial year if unitholder exercises the right to put the unit back to the Fund.

Units are created and cancelled at prices based on the Fund’s net asset value per unit at

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

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

units.



21

H SEGMENT REPORTING

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

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

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

identified as the strategic asset allocation committee of the Manager that makes strategic

decisions.

I CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS IN APPLYING ACCOUNTING

POLICIES

The preparation of financial statements in conformity with the Malaysian Financial Reporting

Standards requires the use of estimates and assumptions that affect the reported amounts

of assets and liabilities as at the date of the financial statements and the reported amounts

of revenues and expenses during the financial period. Although these estimates are based

on the Manager’s best knowledge of current events and actions, actual results could differ

from those estimates.

The Fund makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. To enhance

the information contents on the estimates, certain key variables that are anticipated to

have material impacts to the Fund’s results and financial position are tested for sensitivity

to changes in the underlying parameters.

Estimates and judgments are continually evaluated by the Manager and are based on

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

believed to be reasonable under the circumstances.

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

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

with the Securities Commission Malaysia’s Guidelines on Unlisted Capital Markets Products

under the Lodge and Launch Framework.



22

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2017

1 THE FUND, THE MANAGER AND THEIR PRINCIPAL ACTIVITIES

Areca Islamic Cash Fund (“the Fund”) is a Wholesale Fund was established pursuant to the

Trust Deed dated 3 June 2015 between Areca Capital Sdn Bhd as the Manager, RHB

Trustees Berhad as the Trustee and all the registered unit holders 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, Islamic deposits and placement with

Islamic investment account. 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:

Note

Financing

and

receivables

RM

Financial

assets at fair

value through

profit or loss

RM

Total

RM

30 September 2017

Short-term Shariah-based deposits with licensed

financial institutions

9

-

43,375,802

43,375,802

Cash at bank 7,247 - 7,247

7,247 43,375,802 43,383,049

30 September 2016

Short-term Shariah-based deposits with licensed


9

-

44,658,775

44,658,775

Cash at bank 1,358 - 1,358

Amount due from Manager 2,700,000 - 2,700,000

2,701,358 44,658,775 47,360,133

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

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

risk), credit risk, liquidity risk, capital risk and reclassification of Shariah status 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 Securities

Commission Malaysia’s 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.



23

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

based deposit placements with licensed financial institutions. The Manager overcomes

this exposure by way of maintaining short term Shariah-based deposits with licensed

financial institutions.

The Fund’s exposure to interest rate risk associated with Shariah-based 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 Shariah-based 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 Securities

Commission Malaysia’s 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

Financial

assets at fair

value

through

profit or loss

Amount

due from

Manager

Total

RM RM RM RM

30 September 2017

Finance

AAA 7,247 36,776,523 - 36,783,770

AA- - 6,599,279 - 6,599,279

7,247 43,375,802 - 43,383,049

30 September 2016

Finance

AAA 1,358 44,658,775 - 44,660,133

Other

Not Rated - - 2,700,000 2,700,000

1,358 44,658,775 2,700,000 47,360,133

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 Shariah-based

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

based liquid assets comprise cash at bank, short term Islamic placements with licensed

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

converted into cash within 7 days.

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

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

maturity date.



24

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

Within

one

month

Between

one month to

one year

Total

RM RM RM

At 30 September 2017

Accrued management fee 27,052 - 27,052

Accrued trustee's fee 1 1,803 - 1,803

Audit fee - 6,600 6,600

Tax agent's fee - 4,913 4,913 Other payables and accruals 1,731 1,040 2,771

30,586 12,553 43,139

At 30 September 2016

Accrued management fee 27,408 - 27,408 Accrued trustee's fee 1,844 - 1,844

Audit fee - 6,000 6,000

Tax agent's fee - 5,000 5,000

Other payables and accruals 1,754 660 2,414

31,006 11,660 42,666

Capital risk

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

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.

3 FAIR VALUE ESTIMATION

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

The fair value of financial assets traded in active markets (such as trading securities) is

based on quoted market prices at the close of trading on the period end date.

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)



25

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

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

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

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

a fair value measurement uses observable inputs that require significant adjustment

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

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

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

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

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

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

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

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

(by class) measured at fair value:

Level 1 Level 2 Level 3 Total

RM RM RM RM


Financial assets at fair value

through profit or loss:

-Short-term Shariah-based

deposits with licensed


-

43,375,802

-

43,375,802


Financial assets at fair value through profit or loss:

-Short-term Shariah-based

deposits with licensed


-

44,658,775

-

44,658,775

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

Shariah-based deposits with licensed financial institutions. 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.



26

4 PROFIT INCOME

Financial

year ended

30.9.2017

RM

Financial

period from

18.6.2015

(date of

launch) to

30.9.2016

RM

Profit from short-term Shariah-based deposits

with licensed financial institutions

1,723,398 1,987,487

Profit from unquoted Sukuk 14,784 -

1,738,182 1,987,487

5 MANAGEMENT FEE

In accordance with the Deed, the Manager is entitled to an annual manager 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.

For the financial year ended 30 September 2017, the management fee is recognised at an

average rate of 0.75% per annum (2016: 0.75%) on the NAV of the Fund calculated on a

daily basis.

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

the amounts recognised above.

6 TRUSTEE'S FEE

In accordance with the Deed, 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.

For the financial year ended 30 September 2017, the Trustee fee is recognised at a rate of

0.05% per annum (2016: 0.05%) on the NAV of the Fund calculated on a daily basis.

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

amounts recognised above.

7 TAXATION

Financial year

ended

30.9.2017

RM

Financial period

from 18.6.2015

(date of

launch) to

30.9.2016

RM

Current taxation - -



27

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

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

Financial

year ended

30.9.2017

RM

Financial

period from

18.6.2015

(date of

launch) to

30.9.2016

RM

Net profit before taxation 1,337,660 1,614,387

Tax at Malaysian statutory rate of 24%

(2016:24%)

321,038

387,453

Tax effects of:

Investment income not subject to tax (420,281) (476,997)

Expenses not deductible for tax purposes 12,508 12,665

Restriction on tax deductible expenses for

wholesale funds

86,735

76,879

Tax expense - -

8 DISTRIBUTION

Financial

year ended

30.9.2017

RM

Financial

period from

18.6.2015

(date of

launch) to

30.9.2016

RM

Profit from short-term Shariah-based

deposits with licensed financial institutions

1,751,170

-

Previous years’ income from short-

term Shariah-based deposits with

licensed financial institutions

1,315,751

-

3,066,921 -

Less: Expenses (413,510) -

Taxation - -

2,653,411

Distribution on 29 September 2017

Gross distribution per unit (cents) 3.00 -

Net distribution per unit (cents) 3.00 -

Distribution on 31 October 2016

Gross distribution per unit (cents) 3.00 -

Net distribution per unit (cents) 3.00 -

Gross distribution is derived using total income less total expenses.

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

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

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



28

9 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

30.9.2017 30.9.2016

RM RM

Net gain on financial assets at fair value through

profit or loss:

-Realised 12,988 -

Designated at fair value through profit or loss at

inception:

- Short-term Shariah-based deposits with licensed

financial institutions*

43,375,802

44,658,775

* Includes profit receivable of RM57,480 (2016:RM54,596).

Weighted average effective profits per annum and weighted average maturity of Shariah-

based deposits with licensed financial institutions are as follows:

30.9.2017 30.9.2016

% %

Shariah-based deposits with licensed financial

institutions*

3.40

4.76

The Shariah-based deposits with licensed financial institution have an average maturity of

25 days (2016:22 days).

10 UNITS IN CIRCULATION

30.9.2017

No of units

30.9.2016

No of units

At the beginning of the financial year 45,457,483 -

Creations of units arising from applications during

the financial year

43,381,410

75,116,409

Creations of units arising from distributions during

the financial year

2,621,496

-

Cancellations of units during the financial year (48,542,082) (29,658,926)

At the end of the financial year 42,918,307 45,457,483

11 TRANSACTIONS WITH DEALERS

Details of transaction with dealers for the financial year ended 30 September 2017 are as

follows:

Value of

trade

Percentage of total

trade

RM %

Name of dealers

30 September 2017

Maybank Islamic Berhad 205,002,552 67.91

KAF Investment Bank Berhad 77,435,051 25.65

CIMB Islamic Bank Berhad 11,428,512 3.79 AmBank Islamic Berhad 8,000,400 2.65

301,866,515 100.00



29

Value of

trade

Percentage

of total

trade

RM %

30 September 2016

Maybank Islamic Berhad 154,126,001 72.73

KAF Investment Bank Berhad 56,170,000 26.51 CIMB Islamic Bank Berhad 1,605,000 0.76

211,901,001 100.00

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

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

Related party Relationship

Areca Capital Sdn Bhd The Manager

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

The units are held beneficially by the Manager for booking purposes. Other than the above,

there were no units held by other Directors or parties related to the Manager.

13 MANAGEMENT EXPENSE RATIO (“MER”)

2017 2016

% %

MER 0.87 0.98

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

administrative expenses which is calculated as follows:

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

E

A = Management fee

B = Audit fee

C = Tax agent's fee

D = Other expenses

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

The average net asset value of the Fund for the financial year is RM47,319,586

(2016:RM37,941,078)



30

14 PORTFOLIO TURNOVER

2017 2016

PTR (times)

6.20

3.97

The portfolio turnover is derived from the following calculation:

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

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

where:

total acquisition for the financial period= RM292,869,565 (2016:RM172,946,822)

total disposal for the financial period= RM294,155,423 (2016: RM128,342,643)

15 SEGMENTAL INFORMATION

The strategic asset allocation committee of the Investment Manager makes the strategic

resource allocations on behalf of the Fund. The Fund has determined the operating

segments based on the reports reviewed by the Manager that are used to make strategic

decisions.

The committee is responsible for the Fund’s entire portfolio and considers the business to

have a single operating segment. The committee’s asset allocation decisions are based on a

single integrated investment strategy and the Fund’s performance is evaluated on an

overall basis.

The reportable operating segment derives its income by seeking investments to achieve

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

returns consist of profit income from short term Shariah-based deposits with licensed

financial institution and unquoted Sukuk in Malaysia.

There were no changes in the reportable segments during the financial year ended 30

September 2017.

The internal reporting provided to the committee for the fund’s assets, liabilities and

performance is prepared on a consistent basis with the measurement and recognition

principles of MFRS and IFRS.

16 AUTHORISATION FOR ISSUE OF FINANCIAL STATEMENTS

The financial statements have been authorised for issue by the Manager on 20 November

2017.

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