Post on 12-Mar-2018
I NTERIM REPORT MA RCH 2014
Areca growthTRUST Fund
Contents
CORPORATE DIRECTORY 2
MANAGER’S REPORT
Fund Information, Performance & Review 3
Market Review & Outlook 8
TRUSTEE’S REPORT 10
STATEMENT BY THE MANAGER 10
UNAUDITED FINANCIAL STATEMENTS FOR
Areca growthTRUST Fund 11
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Areca growthTRUST Fund
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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: invest@arecacapital.com
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)
Tam Chiew Lin (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)
Teoh Boon Kiaw (Non-Independent)
Dr. Junid Saham (Independent)
AUDIT COMMITTEE MEMBERS
Dato’ Wee Hoe Soon @ Gooi Hoe Soon
Wong Teck Meng
Dr. Junid Saham
TRUSTEE
Deutsche Trustees Malaysia Berhad
(763590-H)
Level 20, Menara IMC
8, Jalan Sultan Ismail
50250 Kuala Lumpur
Tel: 03-2053 7522 Fax: 03-2053 7526
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 Travers
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: invest@arecacapital.com
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 6697/6698
Fax: 605-249 6696
MALACCA
95A, Jalan Melaka Raya 24
Taman Melaka Raya
75000 Melaka
Tel : 606-282 9111
Fax: 606-283 9112
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F U N D I N F O R M A T I O N
Name of the Fund Areca growthTRUST Fund
Fund Category/
Type
Equity / Growth
Objective of the
Fund
To provide investors with an opportunity for capital growth.
Benchmark MSCI AC Asia Ex Japan Index (obtainable from Bloomberg)
Distribution Policy
of the Fund
Incidental. In the absence of instruction to the contrary from a 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 with no entry fee.
Profile of Unit
Holdings
* excluding units held
by the Manager
As at 31 March 2014
Size of Holding
(Units)
No. of
accounts %
No. of
units held
‘million
%
Up to 5,000 1 3.57 0.01 0.05
5,001 to 10,000 - - - -
10,001 to 50,000 10 35.71 0.35 7.25
50,001 to 500,000 13 46.43 1.60 32.98
500,001 and above 4 14.29 2.89 59.72
Total* 28 100.00 4.85 100.00
Rebates & Soft
Commissions
The Management Company retains soft commissions received from
stockbrokers, provided these are of demonstrable benefit to the Unit
Holders. The soft commissions may take the form of goods and services
provided such as data and quotation services, computer software and
investment related publications incidental to the management of the Fund.
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 12 March 2010
Commencement
Date
12 April 2010
Initial Offer Price RM0.5000 per unit during the initial offer period of 21 days ended 1 April
2010
Pricing Policy
Single Pricing – Selling and repurchase of units by Manager are at Net Asset
Value per unit
Financial year end 30 September
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F U N D P E R F O R M A N C E
2014 2013 2012
NET ASSET VALUE (“NAV”) as at 31 March
Total Net Asset Value (RM million) 2.51 4.44 3.70
Units in circulation (million units) 4.85 8.29 7.93
NAV per unit (RM) 0.5173 0.5354 0.4667
2014 2013 2012
HIGHEST & LOWEST NAV PER UNIT for the period ended 31 March Please refer to Note 1 for further information on NAV and pricing policy
Highest NAV per unit (RM) 0.5322 0.5555 0.4852
Lowest NAV per unit (RM) 0.4887 0.4266 0.4408
2014 2013 2012
ASSET ALLOCATION % of NAV as at 31 March
Quoted equities & equity-related securities (Local)
Main Market
Construction 2.53 - -
Consumer Products 1.60 - -
Finance 2.05 - -
Industrial Products 12.62 - -
Properties 2.25 - -
Trading / Services 13.30 - 4.60
Quoted equities & equity-related securities (Foreign)
Agriculture 7.14 12.11 -
Conglomerates 7.97 - -
Consumer Goods 18.03 7.45 9.92
Consumer Services 16.79 - -
Finance 3.28 3.16 9.50
Industrial Goods/ Products 6.93 - 11.43
Infrastructure, Utilities And Transportation - 15.66 -
Information Technology - - 5.15
Oil & Gas - - 5.06
Plantations - - 4.41
Property, Real Estate And Building Construction - 14.17 22.18
Trade , Services & Investment - 24.95 4.36
Cash & cash equivalent including placements & repo 5.51 22.50 23.39
DISTRIBUTION & UNIT SPLITS
There was no unit split exercise for the financial period under review.
2014
2013
2012
EXPENSE/ TURNOVER for the period ended 31 March
Management expense ratio (MER) (%) 1.29 1.69 1.06
Please refer to Note 2 for further information
Portfolio turnover ratio (PTR) (times) 0.93 1.44 1.87
Please refer to Note 3 for further information
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F U N D P E R F O R M A N C E
2014 2013 2012
TOTAL RETURN for the period ended 31 March
Please refer to Note 4 for further information
Total Return (%) 5.90 22.43 4.97
- Capital Return (%) 5.90 22.43 4.97
- Income Return (%) - - -
2014 2013 2012 2011
Annual Total Return (%) 5.90 22.43 4.97 3.84
MSCI AC Asia Ex Japan Index (%) 2.35 6.13 12.19 5.44
1-yr 3-yrs 5-yrs
Average Total Return (%) -3.38 -0.48 -
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 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.
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F U N D R E V I E W
During the period from October 2013 to March 2014, the Fund’s NAV per unit increased by 5.9%
compared to benchmark return (MSCI Asia Ex-Japan) of 2.3%.
The Fund achieved its objective of providing investors with an opportunity for capital growth for the
period under review. The Fund out-performed its benchmark mainly due to stocks selection. In
particular, the Fund benefited from the performance of selected Malaysian small cap stocks.
The Fund’s top performing holdings were Brahim’s Holdings Berhad, Melco International
Development and Uzma Bhd while the under-performers were Beijing Capital International Airport,
Emperor Watch & Jewellery Limited and Shun Tak Holdings Ltd.
Investment Policy and Strategy
The Fund invests in domestic and Asian equities and equity-related securities with capital growth
potential, including collective investment schemes with similar objective as the Fund.
Depending on the market conditions and outlook, the Manager may choose to hold on to the cash
invested by the investors in deposits, fixed income securities or collective investment schemes for
such time and invest into the equities only when the opportunities arise i.e. the Manager will make
its best effort in timing the market entry to achieve the Fund’s objective. The Manager will employ
an aggressive investment strategy tactically in achieving the objective.
NAV per unit as at 31 March 2014 RM0.5173
Asset Allocation/ Portfolio Composition as at 31 March 2014 2013 2012
Equities and equity related
Securities - local 34.35% - 4.60%
- foreign 60.14% 77.50% 72.01%
Cash & cash equivalents 5.51% 22.50% 23.39%
5.51%
34.35% 60.14%
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F U N D R E V I E W
Performance of Areca growthTRUST Fund
for the financial period since inception to 31 March 2014
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MARKET REVIEW & OUTLOOK
ECONOMIC REVIEW & OUTLOOK
Malaysia’s real GDP expanded at a better-than-expected 5.1% y-o-y in 4Q13 from 5.0% y-o-y in
3Q13, supported by domestic demand and improvement in exports. Private consumption growth
remained high at 7.3% y-o-y in 4Q13, although the pace of expansion moderated from 8.2% y-o-y
in 3Q13. Meanwhile, growth in private investment improved to 16.5% y-o-y in 4Q13 from 15.2% y-
o-y in 3Q13 amid higher capital spending in the service and manufacturing sectors. This brought
the full year growth rate to 4.7% in 2013 compared to 5.6% in 2012. Headline inflation inched
higher to 3.5% y-o-y in February 2014, the highest rate since November 2011. The surge was
primarily due to administered price adjustments from subsidy rationalisation.
Meanwhile, the current account surplus widened to RM16.2 billion in 4Q13 from RM9.8 billion in
3Q13. The federal government’s fiscal deficit declined to 3.9% of GDP in 2013 from 4.5% of GDP in
2012. Going forward, Malaysia is expected to continue to record a current account surplus in 2014
amid a recovery in export and gain in terms of trade from rising commodity prices. The
Government is also expected to meet its fiscal deficit target of 3.5% of GDP in 2015, aided by the
rollout of GST and implementation of more subsidy rationalisation measures.
In its last Monetary Policy Statement, Bank Negara Malaysia commented that the global economy
has continued to recover at a moderate pace, particularly in the major advanced economies.
However, the international financial markets are still vulnerable to shifts in global liquidity and
increased volatility. Going forward, the growth momentum is expected to be driven by an
improvement in the external sector while domestic demand could see some moderation due to the
impact from cost-push inflation pressure. The central bank is forecasting a GDP growth rate of
4.5%-5.5% in 2014 and expects inflation to trend higher due to domestic cost factors.
Regionally, the economic data of China seemed to suggest that its growth momentum has slowed.
The HSBC Flash PMI slid to 48.1 in March 2014, the lowest since July 2013. China’s industrial
production for January and February 2014 also grew weaker than market expectations. The
macroeconomic fundamentals in Indonesia however showed signs of improvement. Its inflation has
moderated to 7.3% in March 2014 while trade balance swung into surplus in February 2014 as
imports declined more than exports.
EQUITY MARKET REVIEW
During the period under review, the MSCI AC Asia Ex-Japan (MXASJ) index gained 2.3% (in Ringgit
terms) whilst the FBM KLCI gained 4.6%. Vietnam, India and Indonesia led the gainers while China,
Hong Kong and Korea were the laggards.
After surprising the market by not tapering its quantitative easing (QE) measures in its September
2013 meeting, the US Federal Reserve (US Fed) did eventually announced QE tapering in December
2013. The impact on market was a bit more muted with investors taking the announcement in
stride, possibly because the markets have been adjusting since mid 2013.
At the start of 2014, emerging markets, with the exception of Indonesia, continued to see foreign
funds outflows due to affects of QE tapering, weakening macro conditions in countries like
Argentina and Turkey and the potential slowdown in China’s economic growth.
The Malaysian market continued its ascent towards the year end as investors were positive on fiscal
consolidation measures announced in the budget which included subsidy rationalisation and the
implementation of Goods and Services Tax (GST) in 2015. While these measures would result in
slower consumption growth in the short term, fiscal consolidation is needed for Malaysia to avoid a
sovereign rating downgrade.
EQUITY MARKET OUTLOOK & STRATEGY
The US Fed has announced the commencement of QE tapering in 2014. This is expected to trigger
some outflows from emerging markets to developed markets and cause some weaknesses to Asian
markets. However, we believe that the impact would be less compared to mid 2013 when QE
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tapering fears first cropped up as investors have already been adjusting their portfolios since then.
We would be looking for opportunities to accumulate on dips.
Beyond the short term impact from QE tapering, we believe that the improving outlook in the US
and Eurozone economies would eventually be positive for the growth prospects of Asian markets,
including Malaysia.
One of the concerns about Malaysia is the country’s fiscal position but recent announcements by the
Government on implementation of GST and the rollback of subsidies for fuel and sugar would help
to soothe some of these concerns. While this would have a negative impact on consumption in the
short term, we think that it would be a case of short term pain to achieve fiscal consolidation in the
medium to long term.
Overall, we remain constructive on the local bourse due to favourable liquidity conditions, positive
momentum from Economic Transformation Programme (ETP) and better outlook for Crude Palm Oil
prices. We would continue to be well invested in equities and continue to concentrate on
opportunities in selected investment themes like ETP, pricing power and capital management.
For the region, we favour countries such as Hong Kong, China, Korea and Singapore as these
countries are seen to benefit from the economic recovery in the developed markets. We are also
looking to build up positions in selected high quality stocks in the Asean markets.
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T R U S T E E ’ S R E P O R T
For The Period Ended 31 March 2014
To the Unit holders of Areca growthTRUST Fund
We have acted as Trustee of Areca growthTRUST Fund (the “Fund”) for the financial period ended
31 March 2014. To the best of our knowledge, for the period under review, 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 Trustee under the Deed,
the Securities Commission Malaysia’s Guidelines on Unit Trust Funds, the Capital Markets
and Services Act 2007 and other applicable laws;
(b) the valuation/pricing for the Fund has been carried out in accordance with the Deed of the
Fund and applicable regulatory requirements; and
(c) creation and cancellation of units for the Fund have been carried out in accordance with the
Deed of the Fund and applicable regulatory requirements.
For Deutsche Trustees Malaysia Berhad
(Company No: 763590-H)
SOON LAI CHING
MANAGER, TRUSTEE OPERATIONS
WONG MUN LOONG
MANAGER, TRUSTEE OPERATIONS
Kuala Lumpur
15 May 2014
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 growthTRUST Fund
We, Wong Teck Meng and Dato’ Wee Hoe Soon @ Gooi Hoe Soon, being two of the Directors of
Areca Capital Sdn Bhd, do hereby state that in our opinion as the Manager, the unaudited financial
statements 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 31 March 2014 and of its financial performance,
changes in equity and cash flows of the financial period ended 31 March 2014 in accordance with
the Malaysian Financial Reporting Standards and International Financing Reporting Standards.
For and on behalf of the Manager
ARECA CAPITAL SDN BHD
WONG TECK MENG DATO’ WEE HOE SOON @ GOOI HOE SOON
EXECUTIVE DIRECTOR INDEPENDENT DIRECTOR
Kuala Lumpur Kuala Lumpur
15 May 2014 15 May 2014
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UNAUDITED STATEMENT OF FINANCIAL POSITION
As At 31 March 2014
Note
31.03.2014
31.03.2013
01.04.2012
RM RM RM
ASSETS
CURRENT ASSETS
Financial assets at fair value through profit or loss
6
2,368,107
3,438,657
2,834,220
Cash and cash equivalents 7 199,415 526,440 1,372,075
Amount due from Manager - 484,196 -
Amount due from a stockbroker - - 526,996
Dividend receivable 1,921 5,473 -
Tax recoverable 4,944 - -
TOTAL ASSETS 2,574,387 4,454,766 4,733,291
LIABILITIES
CURRENT LIABILITIES
Amount due to Manager 1,987 - -
Accrued management fee 3,544 5,039 5,023
Accrued Trustee’s fee 177 252 251
Other payables and accruals 62,276 12,904 1,028,491
Total Liabilities 67,984 18,195 1,033,765
Net Assets Value of the Fund 8 2,506,403 4,436,571 3,699,526
EQUITY
Unit holder’s capital 2,581,841 4,351,407 4,062,949
Accumulated (losses)/ income (75,438) 85,164 (363,423)
Total Net Assets Attributable to Unit
Holders 8 2,506,403 4,436,571 3,699,526
Number of Units in Circulation 8 4,845,630 8,286,777 7,927,523
Net Asset Value Per Unit 0.5173 0.5354 0.4667
The accompanying notes form an integral part of these financial statements.
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UNAUDITED STATEMENT OF COMPREHENSIVE INCOME
For 6-month Period ended 31 March 2014
Note
01.10.2013
to
31.03.2014
RM
01.10.2012
to
31.03.2013
RM
INVESTMENT INCOME
Gross dividend income 16,017 17,059
Interest income from deposits with licensed
financial institutions 1,626 4,059
Net gain on financial assets at fair value
through profit or loss
6 232,048 747,581
249,691 768,699
EXPENSES
Management fee 3 24,263 25,790
Trustee’s fee 4 1,213 1,290
Transaction cost 22,364 39,990
Administrative expenses 13,675 27,683
61,515 94,753
Net Income Before Taxation 188,176 673,946
Taxation 5 (1,419) (3,637)
Net Income After Taxation Representing
Total Comprehensive Income For The
Financial period
186,757 670,309
Net Income After Taxation Is Made Up Of The
Following:
Realised amount (29,533) 255,562
Unrealised amount 216,290 414,747
186,757 670,309
The accompanying notes form an integral part of these financial statements.
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UNAUDITED STATEMENT OF CHANGES IN EQUITY
For 6-month Period ended 31 March 2014
Note
Unit holders’
capital
Accumulated
(losses)/
income
Total
RM RM RM
Balance as at 1 October 2013 3,820,057 (262,195) 3,557,862
Movement in unit holders’ capital:
Creation of units from applications 8 17,004 - 17,004
Cancellation of units 8 (1,255,220) - (1,255,220)
Total comprehensive income for the financial period
- 186,757 186,757
Balance as at 31 March 2014 2,581,841 (75,438) 2,506,403
Balance as at 1 October 2012 3,561,707 (585,145) 2,976,562
Movement in unit holders’ capital:
Creation of units from applications 8 892,948 - 892,948
Cancellation of units 8 (103,248) - (103,248)
Total comprehensive income for the
financial period
- 670,309 670,309
Balance as at 31 March 2013 4,351,407 85,164 4,436,571
The accompanying notes form an integral part of these financial statements.
UNAUDITED STATEMENT OF CASH FLOWS
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For 6-month Period ended 31 March 2014
Note
01.10.2013
to
31.03.2014
01.10.2012
to
31.03.2013
RM RM
Cash Flows From Operating Activities
Proceeds from sale of investments 3,568,135 4,994,609
Purchase of investments (2,221,252) (4,995,725)
Subscription for initial public offering (48,391) -
Dividend income received 19,051 9,995
Interest received from deposits with licensed
financial institutions 1,626 4,059
Management fee paid (25,441) (24,726)
Trustee’s fee paid (16,399) (16,162)
Payment for other fees and expenses (15,037) (26,813)
Net Cash Generated From/ (Used In) Operating
Activities 1,262,292 (54,763)
Cash Flows From Financing Activities
Cash proceeds from units created 17,004 408,752
Payment for cancellation of units (1,254,221) (103,248)
Net Cash (Used In)/ Generated From Financing
Activities (1,237,217) 305,504
Net Increase In Cash And Cash Equivalents 25,075 250,741
Cash And Cash Equivalents At The
Beginning of The Financial Period
174,340
275,699
Cash And Cash Equivalents At The End Of
The Financial Period 7 199,415 526,440
The accompanying notes form an integral part of these financial statements.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FOR THE FINANCIAL PERIOD ENDED 31 MARCH 2014
The following accounting policies have been used consistently in dealing with items which are
considered material in relation to the financial statements.
A 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”).
The financial statements for the financial year ended 30 September 2013 are the first set of
financial statements prepared in accordance with the MFRS, including MFRS 1 ‘First-time adoption
of MFRS’. The Fund have consistently applied the same accounting policies in its opening MFRS
statement of financial position at 1 October 2011 (transition date) and throughout all years
presented, as if these policies had always been in effect. Note 14 discloses the impact of the
transition to MFRS on the Fund's reported financial position, financial performance and cash flows.
The preparation of financial statements in conformity with the MFRS 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 year. 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 M.
(i) The new standards and amendments to published standards which are relevant to the Fund
but not yet effective and have not been early adopted are as follows:
(a) Financial year beginning on/after 1 October 2013
• Amendment to MFRS 7 “Financial instruments: Disclosures” (effective from 1
January 2013) requires more extensive disclosures focusing on quantitative
information about recognised financial instruments that are offset in the statement
of financial position and those that are subject to master netting or similar
arrangements irrespective of whether they are offset. This amendment does not
have any impact on the classification and valuation of the Fund’s financial
statements.
• MFRS 13 “Fair value measurement” (effective from 1 January 2013) aims to
improve consistency and reduce complexity by providing a precise definition of fair
value and a single source of fair value measurement and disclosure requirements
for use across MFRSs. The requirements do not extend the use of fair value
accounting but provide guidance on how it should be applied where its use is
already required or permitted by other standards. The enhanced disclosure
requirements are similar to those in MFRS 7 “Financial instruments: Disclosures”,
but apply to all assets and liabilities measured at fair value, not just financial ones.
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) Financial year beginning on/after 1 October 2014
• Amendment to MFRS 132 “Financial instruments: Presentation” (effective from 1
January 2014) does not change the current offsetting model in MFRS 132. It
clarifies the meaning of ‘currently has a legally enforceable right of set-off’ that the
right of set-off must be available today (not contingent on a future event) and
legally enforceable for all counterparties in the normal course of business. It
clarifies that some gross settlement mechanisms with features that are effectively
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equivalent to net settlement will satisfy the MFRS 132 offsetting criteria. This
amendment does not have any impact on the classification and valuation of the
Fund’s financial statements.
(c) Financial year beginning on/after 1 October 2015
• MFRS 9 “Financial instruments - classification and measurement of financial assets
and financial liabilities” (effective from 1 January 2015) replaces the multiple
classification and measurement models in MFRS 139 with a single model that has
only two classification categories: amortised cost and fair value. The basis of
classification depends on the entity’s business model for managing the financial
assets and the contractual cash flow characteristics of the financial asset.
The accounting and presentation for financial liabilities and for de-recognising
financial instruments has been relocated from MFRS 139, without change, except
for financial liabilities that are designated at fair value through profit or loss
(“FVTPL”). Entities with financial liabilities designated at FVTPL recognise changes in
the fair value due to changes in the liability’s credit risk directly in other
comprehensive income (“OCI”). There is no subsequent recycling of the amounts in
OCI to profit or loss, but accumulated gains or losses may be transferred within
equity.
The guidance in MFRS 139 on impairment of financial assets and hedge accounting
continues to apply. MFRS 7 requires disclosures on transition from MFRS 139 to
MFRS 9. 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
Interest income from short term deposits is recognised on an accrual basis using the effective
interest method.
Dividend income is recognised on the ex-dividend date, when the right to receive the dividend has
been established.
Realised gain or loss on sale of investments are accounted for as the difference between the net
disposal proceeds and the carrying amount of the investments, determined on a weighted average
cost basis.
C TAXATION
Current tax expense is determined according to the Malaysian tax laws at the current based upon
the taxable profits earned during the financial year.
Tax on dividend income from foreign quoted investments is based on the tax regime of the
respective countries that the Fund invests in.
D PRESENTATION AND FUNCTIONAL 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 presentation and functional
currency.
E FOREIGN CURRENCY TRANSLATION
Foreign currency transactions in the Fund are translated into the functional currency using the
exchange rates prevailing at the transaction dates. Foreign exchange gains and losses resulting
from the settlement of such transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies are recognised in the statement of
comprehensive income, expect when deferred in other comprehensive incomes as qualifying cash
flow hedges.
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17
F FINANCIAL ASSETS AND LIABILITIES
(i) Classification
The Fund designates its investment in quoted investments 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, amount
due from Manager and dividends receivable which are all due within 12 months.
Financial liabilities are classified according to the substance of the contractual arrangements
entered into and the definitions of a financial liability.
The Fund’s financial liabilities which include amount due to Manager, accrued management
fee, accrued Trustee’s fee and other payables and accruals are recognised initially at fair
value plus directly attributable transaction cost and subsequently measured at amortised
cost using the effective interest method.
(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. Quoted investments are initially
recognised at fair value. Subsequent to initial recognition, financial assets at fair value
through profit or loss are measured at fair value with gain and loss recognised in the
statement of comprehensive income. Transaction costs are expensed in the statement of
comprehensive income.
Financial assets are derecognised when the rights to receive cash flows from the quoted
investments have expired or have been transferred and the Fund has transferred
substantially all risks and rewards of ownership.
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 liability is derecognised when the obligation under the liability is extinguished.
Gain and losses are recognised in the statement of comprehensive income when the
liabilities are derecognised, and through the amortisation process.
Unrealised gains or losses arising from changes in the fair value of the ‘financial assets at
fair value through profit or loss’ category are presented in the statement of comprehensive
income within ‘net gain/(loss) on financial assets at fair value through profit and loss ’ in
the period in which they arise. Any unrealised gains however are not distributable.
Dividend income from financial assets at fair value through profit or loss is recognised in
the statement of comprehensive income as part of gross dividend income when the Fund’s
right to receive payments is established.
Quoted investments outside Malaysia are valued at the market bid prices quoted of the
respective foreign stock exchanges as at the date of the statement of financial position.
If a valuation based on the market price does not represent the fair value of the securities,
for example during abnormal market conditions or no market price is available, including in
the event of a suspension in the quotation of the securities for a period exceeding 14 days,
or such shorter period as agreed by the Trustee, then the securities are valued as
determined in good faith by the Manager, based on the methods or bases approved by the
Trustee after appropriate technical consultation.
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Areca growthTRUST Fund
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Deposits with licensed financial institutions are stated at cost plus accrued interest
calculated on the effective interest method over the period from the date of placement to
the date of maturity of the respective financial institutions deposits.
Financing and receivables and other financial liabilities are subsequently carried at
amortised cost using the effective interest method.
For assets carried at amortised cost, the Fund assesses at the end of the reporting period
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 interest rate.
The asset’s carrying amount of the asset is reduced and the amount of the loss is
recognised in statement of comprehensive income. If ‘financing and receivables’ or a ‘held-
to-maturity investment’ has a variable interest rate, the discount rate for measuring any
impairment loss is the current effective interest 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 period, 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.
G AMOUNT DUE FROM/(TO) STOCKBROKERS
Amounts due from and to stockbrokers represent receivables for securities sold and payables for
securities purchased that have been contracted for but not yet settled or delivered on the
statement of financial position date respectively.
These amounts are recognised initially at fair value and subsequently measured at amortised cost
using the effective interest method, less provision for impairment for amounts due from brokers. A
provision for impairment of amounts due from stockbrokers is established when there is objective
evidence that the Fund will not be able to collect all amounts due from the relevant stockbroker.
Significant financial difficulties of the stockbroker, probability that the stockbroker will enter
bankruptcy or financial reorganisation, and default in payments are considered indicators that the
amount due from stockbrokers is impaired. Once a financial asset or a group of similar financial
assets has been written down as a result of an impairment loss, interest income is recognised using
the rate of interest used to discount the future cash flows for the purpose of measuring the
impairment loss.
The effective interest method is a method of calculating the amortised cost of a financial asset or
financial liability and of allocating the interest income or interest expense over the relevant period.
The effective interest rate is the rate that exactly discounts estimated future cash payments or
receipts throughout the expected life of the financial instrument, or, when appropriate, a shorter
period, to the net carrying amount of the financial asset or financial liability. When calculating the
effective interest rate, the Fund estimates cash flows considering all contractual terms of the
financial instrument but does not consider future credit losses. The calculation includes all fees and
points paid or received between parties to the contract that are an integral part of the effective
interest rate, transaction costs and all other premiums or discounts.
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H CASH AND CASH EQUIVALENTS
For the purpose of statement of cash flows, cash and cash equivalents comprise deposits with a
licensed financial institution and bank balance with a licensed bank that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of changes in value.
I CREATION AND CANCELLATION OF UNITS
The Fund issues cancellable units, which are cancelled at the unit holder’s option and are classified
as equity. Cancellable units can be returned to the Fund at any time for cash equal to a
proportionate share of the Fund’s net asset value (“NAV”). The outstanding units are carried at the
redemption amount that is payable at the statement of financial position date if the unit holder
exercises the right to return the unit to the Fund.
Units are created and cancelled at the unit holder’s option at prices based on the Fund’s NAV per
unit at the time of creation or cancellation. The Fund’s NAV per unit is calculated by dividing the net
assets attributable to unit holders with the total number of outstanding units.
J UNIT HOLDER’S CAPITAL
The unit holders’ contributions to the Fund meet the definition of puttable instruments classified as
equity instruments under the revised MFRS 132 “Financial Instruments: Presentation”.
The units in the Fund are puttable instruments which entitle the unit holders to a pro-rata share of
the net asset value of the Fund. The units are subordinated and have identical features. There is no
contractual obligation to deliver cash or another financial asset other than the obligation on the
Fund to repurchase the units. The total expected cash flows from the units in the Fund over the life
of the units are based on the change in the net asset value of the Fund.
K SEGMENTAL INFORMATION
A business segment is a group of assets and operations engaged in providing products or services
that are subject to risks and returns that are different from those of other business segments. A
geographic segment is engaged in providing products or services within a particular economic
environment that are subject to risks and returns that are different from those of segments
operating in other economic environments.
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 Investment Committee of the Fund’s manager that undertakes strategic decisions for the Fund.
L FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial instruments comprise financial assets and financial liabilities. Fair value is the amount at
which a financial asset could be exchanged or a financial liability settled, between knowledgeable
and willing parties in an arm’s length transaction. The information presented herein represents the
estimates of fair values as on the statement of financial position date.
Note
Financing and
receivables
Financial
assets at fair value through
profit or loss
Total
31 March 2014 RM RM RM
Financial assets at fair value through
profit or loss
6 - 2,368,107 2,368,107
Dividends receivable 1,9211 - 1,921
Cash and cash equivalents 7 199,4155 - 199,415
201,336 2,368,107 2,569,443
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Note
Financing
and
receivables
Financial
assets at fair
value through
profit or loss
Total
31 March 2013 RM RM RM
Financial assets at fair value through
profit or loss
6
-
3,438,657
3,438,657
Amount due from Manager 484,196 - 484,196 Dividends receivable 5,473 - 5,473
Cash and cash equivalents 7 526,440 - 526,440
1,016,109 3,438,657 4,454,766
1 April 2012
Financial assets at fair value through
profit or loss
6
-
2,834,220
2,834,220
Amount due from a stockbroker 526,996 - 526,996
Cash and cash equivalents 7 1,372,075 - 1,372,075
1,899,071 2,834,220 4,733,291
All current liabilities are financial liabilities which are carried at amortised cost.
M CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS IN APPLYING ACCOUNTING POLICIES
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
content of the estimates, certain key variables that are anticipated to have material impact 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 the Trustee and are based
on historical experience and other factors, including expectations of future events that are believed
to be reasonable under the circumstances.
INTERIM REPORT MARCH 2014
Areca growthTRUST Fund
21
NOTES TO THE FINANCIAL STATEMENTS – 31 MARCH 2014
1 INFORMATION ON THE FUND
Areca Recovery Growth Fund, now known as Areca growthTRUST Fund (“the Fund”) was
established pursuant to a Trust Deed dated 12 November 2009 as modified by the First
Supplemental Deed dated 17 December 2012 (“the Deed”) between Areca Capital Sdn Bhd as
the Manager, Deutsche Trustees Malaysia Berhad as the Trustee and all the registered unit
holders of the Fund. The First Supplemental Deed was executed to reflect the change to the
Fund’s name, to remove the Fund’s maturity date, to change its objective and other
consequential amendments of the Fund.
The principal activity of the Fund is to invest in investments as defined under Schedule 6 of
the Deed, which include stocks and shares of companies quoted on any recognised stock
exchange(s) in Malaysia and permitted foreign stock exchanges, and deposits with financial
institutions. The Fund commenced operations on 12 March 2010 and will continue its
operations until terminated in accordance with Part 12 of the Deed.
The objective of the Fund is to provide investors with an opportunity for capital growth.
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 RISK MANAGEMENT OBJECTIVES AND POLICIES
The Fund is exposed to a variety of risks which include market risk (inclusive of price risk,
exposure to interest rate risk and currency risk), business risk, capital risk, credit risk and
liquidity risk.
Financial risk management is carried out through internal control processes adopted by the
Manager and adherence to the investment restrictions as stipulated in the Securities
Commission Malaysia’s Guidelines on Unit Trust Funds.
(a) Market risk
(i) Price risk
The risk refers to changes and developments in regulations, politics and economy of
the country. The very nature of a unit trust fund, however, helps mitigate this risk
because a fund would generally hold a well-diversified portfolio of securities from
different market sectors that the collapse of any security or any one market sector
would not impact too greatly on the value of the Fund.
The table below show assets of the Fund as at 31 March which are exposed to price
risk:
31.03.2014
31.03.2013
01.04.2012 RM RM RM
Quoted securities designated at fair
value through profit or loss
2,368,107 3,438,657 2,834,220
The following table summarises the sensitivity of the Fund’s net asset value and
profit/(loss) after tax to movements in prices of quoted securities at the end of the
reporting year. The analysis is based on the assumptions that the price of the quoted
securities increased by 5% and decreased by 5% with all other variables held
constant. This represents management’s best estimate of a reasonable possible shift
in the quoted securities, having regard to the historical volatility of the prices.
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Change in price of
financial assets at fair
value through profit or loss
Market value
Increase/(decrease)
in profit /(loss) after
taxation and
net asset value
% RM RM
31.03.2014
+5% 2,486,512 118,405 -5% (2,249,702) (118,405)
31.03.2013
+5% 3,610,590 171,933
-5% 3,266,724 (171,933)
01.04.2012
+5% 2,975,931 141,711
-5% 2,692,509 (141,711)
(ii) Exposure to interest rate risk
The Fund is exposed to interest rate risk. Changes in interest rates will affect the
value of the investments and its returns. To manage the risk, investments will be
concentrated in investment grade issues by financial institutions and companies
determined by the Manager.
The above interest rate is a general economic indicator that will have an impact on
the management of the fund regardless whether it is a unit trust fund or otherwise. It
does not in any way suggest that the fund will invest in conventional financial
instruments. All the investments carried out for the fund are in accordance with the
unit trust requirements.
As at the date of the statement of financial position, all the financial assets and
financial liabilities have no exposure to interest rate movement except for deposit
with a licensed financial institution of RM190,056 (31.03.2013: RM521,024;
01.04.2012: RM1,363,985) which have maturities of less than one year.
The Fund’s investments in deposits with licensed financial institutions are short term
in nature. Therefore, exposure to interest rate fluctuations is minimal.
(iii) Currency risk
As the Fund may invest its assets in securities denominated in a wide range of
currencies other than Ringgit Malaysia, the net asset value of the fund expressed in
Ringgit Malaysia may be affected favourably or unfavourably by exchange control
regulations or changes in the exchange rates between Ringgit Malaysia and such
other currencies. The risk is minimised through investing in a wide range of foreign
currencies denominated assets and thus, diversifying the risk of single currency
exposure.
In the normal course of investment, the Fund Manager will usually not hedge foreign
currency exposure. The Fund Manager may however depending on prevailing market
circumstances at a particular point in time, choose to use forward or option contracts
for hedging and risk reduction purposes.
The following table sets out the foreign exchange/currency risk concentrations and
counterparties of the Fund:
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Financial
assets at fair
value through
profit or loss
Dividends
receivable
Total
31 March 2014 RM RM RM
HKD 1,072,355 1,921 1,074,276
IDR 82,111 - 82,111
PHP 173,741 - 173,741
SGD 179,028 - 179,028
1,507,235 1,921 1,509,156
31 March 2013
HKD 324,296 - 324,296
IDR 2,163,773 3,613 2,167,386
SGD 537,272 - 537,272
THB 413,316 1,860 415,176
3,438,657 5,473 3,444,130
The table summarises the sensitivity of the Fund’s financial assets fair value to changes
in foreign exchange movements at the end of the reporting year. The analysis is based on
the assumption that the foreign exchange rate changes by 5% with all variables remain
constants. This represents management’s best estimate of a reasonable possible shift in
the foreign exchange rate having regard to historical volatility of this rate. An
increase/(decrease) in foreign exchange rate will result in a corresponding
(decrease)/increase in net assets attributable to unit holders by approximately 5%.
Change
in price
Impact on
profit/(loss)
after taxation
Impact on
net asset
value
31 March 2014 % RM RM
HKD 5 53,714 53,714
IDR 5 4,106 4,106
PHP 5 8,687 8,687
SGD 5 8,951 8,951
At 31 March 2013
HKD 5 16,215 16,215
IDR 5 108,370 108,370
SGD 5 26,864 26,864
THB 5 20,759 20,759
Business risk
Business risk of emerging companies with a short track record that tends to be higher
than matured and well-established companies. The Fund gives preference to invest in
companies with a reasonable track record compared to a new company.
The Manager can manage the market cycles and short-term fluctuations by virtue of its
experience, the analytical process adopted by its Fund Manager and by constructing a
diversified investment portfolio.
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Areca growthTRUST Fund
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Redemption and subscription of units are important in the day-to-day management of the
Fund. Liquidity is monitored everyday to ensure the Fund is not affected especially by
unexpected redemption.
The compliance unit is in place to ensure no breaches in investment limits. If there is any
breach, the compliance unit can quickly notify the Fund Manager to take corrective
action.
In managing the Fund, the Manager has established policies and procedures outlining the
internal control mechanism, reporting responsibilities and internal audit and compliance
function.
The performance and investment activities of the Fund are regularly reviewed by the
Investment Committee and the Board of Directors of the Manager.
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 unit holders and benefits for other
stakeholders and to maintain a strong capital base to support the development of the
investment activities of the Fund.
Credit risk
Credit risk refers to the ability of an issuer or a counter party to make timely payments of
interest, principals and proceeds from realisation of investments.
The credit risk arising from placements of 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 Unit Trust Funds.
The credit risk is minimal as all transactions in quoted securities are settled/paid upon
delivery using approved brokers.
Liquidity risk
The Fund maintains sufficient level of liquid assets, after consultation with the Trustee, to
meet anticipated payments and cancellations of units by unit holders. Liquid assets
comprise bank balance with a licensed bank, deposit with a licensed financial institution
and other instruments which are capable of being converted into cash within 7 days.
The table below summarises the Fund’s financial liabilities into relevant maturity
groupings based on the remaining period as at the statement of financial position date to
the contractual maturity date. The amounts in the table are the contractual undiscounted
cash flows.
Less than
1 month
More than
1 month
Total 31 March 2014 RM RM RM
Amount due to Manager 1,987 - 1,987
Accrued management fee 3,544 - 3,544
Accrued trustee fee 177 - 177
Others payables and accruals 51,911 10,365 62,276
Contractual cash out flows 57,619 10,365 67,984
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Less than
1 month
More than
1 month
Total
31 March 2013 RM RM RM
Accrued management fee 5,039 - 5,039
Accrued trustee fee 252 - 252
Other payables and accruals - 12,904 12,904
Contractual cash out flows 5,291 12,904 18,195
1 April 2012
Accrued management fee 5,023 - 5,023
Accrued trustee fee 251 - 251
Other payables and accruals 1,021,491 7,000 1,028,491
Contractual cash out flows 1,026,765 7,000 1,033,765
Fair value estimation
The fair value of financial assets and liabilities traded in active market (such as publicly
traded derivatives and trading quoted securities) are based on quoted market prices at
the close of trading on the year end date. The quoted market price used for financial
assets by the Fund is the current bid price; the appropriate quoted market price for
financial liabilities is the current asking price.
A financial instrument is regarded as quoted in an active market if quoted prices are
readily and regularly available from an exchange, dealer, broker, industry group, pricing
service, or regulatory agency, and those prices represent actual and regularly occurring
market transactions on an arm’s length basis.
The fair value of financial assets and liabilities that are not traded in an active market is
determined by using valuation techniques. The Fund uses a variety of methods and
makes assumptions that are based on market conditions existing at each year end date.
Valuation techniques used for non-standardised financial instruments such as options,
currency swaps and other over-the-counter derivatives, include the use of comparable
recent arm’s length transactions, reference to other instruments that are substantially the
same, discounted cash flow analysis, option pricing models and other valuation
techniques commonly used by market participants making the maximum use of market
inputs and relying as little as possible on entity-specific inputs.
For instruments for which there is no active market, the Fund may use internally
developed models, which are usually based on valuation methods and techniques
generally recognised as standard within the industry. Valuation models are used primarily
to value unlisted quoted securities which market were or have been inactive during the
financial year. Some of the inputs to these models may not be market observable and are
therefore estimated based on assumptions.
The output of a model is always an estimate or approximation of a value that cannot be
determined with certainty, and valuation techniques employed may not fully reflect all
factors relevant to the positions the Fund holds.
The fair value are based on the following methodology and assumptions:
(i) Bank balance with a licensed bank and deposits with licensed financial institutions
with maturities less than 1 year, the carrying value is a reasonable estimate of fair
value.
(ii) The carrying value less impairment provision of receivables and payables are
assumed to approximate their fair values. The carrying value of the financial assets
and financial liabilities approximate their fair value due to their short term nature.
INTERIM REPORT MARCH 2014
Areca growthTRUST Fund
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Valuations are therefore adjusted, where appropriate, to allow for additional factors
including model risk, liquidity risk and counterparty risk.
MFRS 7 “Financial Instruments: Disclosures” requires the Fund to classify fair value
measurements using a fair value hierarchy that reflects the significance of the inputs
used in making the measurements. The fair value hierarchy has the following levels:
• Level 1: Quoted prices (unadjusted) in active market for identical assets or
liabilities.
• Level 2: 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 3: Inputs for the asset and liability that are not based on observable market
data (that is, unobservable inputs)
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 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. 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
RM
Level 2
RM
Level 3
RM
Total
RM
31 March 2014
Financial assets at fair value
through profit or loss:
- Quoted securities 2,368,107 - - 2,368,107
31 March 2013
Financial assets at fair value
through profit or loss:
- Quoted securities 3,438,657 - - 3,438,657
1 April 2012
Financial assets at fair value
through profit or loss:
- Quoted securities 2,834,220 - 2,834,220
Investments whose values are based on quoted market prices in active markets, and are
therefore classified within Level 1, include active quoted securities. The Fund does not adjust
the quoted prices for these instruments. The Fund’s policies on valuation of these financial
assets are stated in Note F.
3 MANAGEMENT FEE
The Schedule 7 of the Deed provides that the Manager is entitled to an annual management
fee at a rate not exceeding 2.50% 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.
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The management fee provided for in the financial statements amounted to 1.60% (2013:
1.60%) per annum for the financial period.
There will be no further liability to the Manager in respect of management fee other than
amounts recognised above.
4 TRUSTEE’S FEE
The Schedule 8 of the Deed provides that the Trustee is entitled to an annual Trustee’s fee at
a rate not exceeding 0.50% 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, subject to
a minimum of RM18,000 per annum (excluding foreign custodian fees and charges).
The Trustee’s fee provided for in the financial statements amounted to RM1,213 (2013:
RM1,290) for the financial period.
There will be no further liability to the Trustee in respect of trustee fee other than the amounts
recognised above.
5 TAXATION
(a) Tax charge for the period
2014 2013
RM RM
Current taxation 1,419 3,637
(b) Numerical reconciliation of income tax expense
The numerical reconciliation between the net loss before taxation multiplied by the
Malaysian statutory tax rate and the tax expense of the Fund is as follows:
2014 2013
RM RM
Net income before taxation 188,176 673,946
Tax calculated at a tax rate of 25% 47,044 168,487
Tax effects of:
- Income not subject to tax (61,004) (190,583)
- Restriction on tax deductible expenses for unit trust fund 6,301 12,861
- Expenses not deductible for tax expenses 9,078 12,872
Tax expense 1,419 3,637
6 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
31.04.2014 31.03.2013 01.04.2012
RM RM RM
Designated at fair value through profit or loss:-
- Quoted securities 2,368,107 3,438,657 2,834,220
Net gain on financial assets at fair value
through profit or loss:
- Realised gain on disposal 31,578 363,890 163,490
- Change in unrealised fair value gain 216,273 414,747 105,967
Net losses on foreign currency exchange (15,803) (31,056) (17,825)
232,048 747,581 251,632
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Name of counter
Nominal
Value
Aggregate
cost
Fair value as at
31.03.2014
Units
RM
RM
% of value of
the fund
Quoted shares in Malaysia
Construction
Muhibbah Engineering (M) Bhd 22,000 56,599 63,580 2.53
Consumer Products
Padini Holdings Bhd 21,000 40,815 40,110 1.60
Finance Allianz Malaysia Bhd 5,000 57,980 51,300 2.05
Industrial Products
Cahya Mata Sarawak Bhd 13,000 81,978 127,400 5.08
Coastal Contracts Bhd 19,000 65,016 95,950 3.83
KNM Group Bhd 51,000 40,545 39,525 1.58
Favelle Favco Bhd 14,000 51,740 53,340 2.13
97,000
239,279
316,215
12.62
Properties
Titijaya Land Berhad 30,000 54,453 56,400 2.25
Trading/Services
Pestech International Berhad 23,300 65,443 97,627 3.90
Uzma Bhd 20,400 74,866 131,580 5.25
Brahim’s Holdings Berhad 43,000 44,062 104,060 4.15
86,700
184,371
333,267
13.30
Total quoted investments in
Malaysia
261,700
633,497
860,872
34.35
Quoted shares in Hong Kong
Conglomerates Shun Tak Holdings Ltd 119,000 220,636 199,752 7.97
Consumer Goods
China Modern Dairy Holdings
Ltd
159,000 221,237 222,748 8.89
Tenwow International Holdings
Ltd
156,000 233,447 229,046 9.14
315,000
454,684
451,794
18.03
Consumer Services
Intime Retail (Group) Co. Ltd 38,000 140,856 133,488 5.33
Melco International
Development Ltd
14,400 128,435 157,510 6.28
Beijing Capital International Airport Co. Ltd
58,000 140,334 129,811 5.18
110,400
409,625
420,809
16.79
Total quoted investments in
Hong Kong
544,400 1,084,943 1,072,355 42.79
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Name of counter
Nominal
Value
Aggregate
cost
Fair value as
at 31.03.2014
Units RM RM % of value of
the fund
Quoted shares in Indonesia
Finance
Panin Financial Tbk 1,100,000 72,849 82,111 3.28
Total quoted investments in
Indonesia
1,100,000
72,849
82,111
3.28
Quoted shares in Philippine
Industrial
Del Monte Pacific Limited
52,800
113,422
92,252
3.68
RFM Corporation 192,000 78,875 81,489 3.25
Total quoted investments in
Philippine
244,800
192,297
173,741
6.93
Quoted shares in Singapore
Agriculture Bumitama Agri Ltd
26,000
70,787
69,996
2.79
First Resources Limited 18,000 103,580 109,032 4.35
44,000
174,367
179,028
7.14
Total quoted investments in
Singapore
44,000
174,367
179,028
7.14
TOTAL QUOTED INVESTMENTS
2,194,900
2,157,953
2,368,107
94.49
UNREALISED GAIN ON
FINANCIAL ASSETS AT FAIR
VALUE THROUGH PROFIT OR
LOSS
210,154
FAIR VALUE OF FINANCIAL
ASSETS AT FAIR VALUE
THROUGH PROFIT OR LOSS
2,368,107
INTERIM REPORT MARCH 2014
Areca growthTRUST Fund
30
Name of counter
Nominal
Value
Aggregate
cost
Fair value as at
31.03.2013
Units
RM
RM
% of value of
the fund
Shares quoted in Hong Kong
Consumer Goods
Emperor Watch & Jewellery Ltd 530,000 165,760 166,768 3.77
Services
Beijing Capital International
Airport Co. Ltd
70,000
163,595
157,528
3.55
Total quoted investments in Hong Kong
329,355
324,296
7.32
Shares quoted in Indonesia
Consumer Goods
Gudang Garam Tbk
10,500
164,628
163,238
3.68
Finance Bank Rakyat Indonesia (Persero)
Tbk
50,500
138,784
140,340
3.16
Infrastructure, Utilities And
Transportation
Perusahaan Gas Negara
(Persero) Tbk
106,000
182,099
200,310
4.51
Cardig Aero Services Tbk 741,500 209,450 176,625 3.98
Petrosea Tbk 530,000 205,958 318,140 7.17
Total
597,507
695,075
15.66
Property, Real Estate And
Building Construction
Jaya Real Property Tbk 140,500 180,336 215,305 4.85
Trade, Services & Investment
Matahari Department Store Tbk 100,000 345,356 349,360 7.87
Ramayana Lestari Sentosa Tbk 540,000 200,337 238,391 5.37
Multipolar Tbk 2,000,000 176,369 362,064 8.16
Total
722,062
949,815
21.40
Total quoted investments in
Indonesia
1,803,317
2,163,773
48.75
Shares quoted in Singapore
Agriculture
Kencana Agri Limited
278,000
229,993
225,360
5.08
Bumitama Agri Ltd 122,000 332,155 311,912 7.03
Total quoted investments in
Singapore
562,148
537,272
12.11
INTERIM REPORT MARCH 2014
Areca growthTRUST Fund
31
Name of counter
Nominal
Value
Aggregate
cost
Fair value as
at 31.03.2013
Units RM RM % of value of
the fund
Shares quoted in Thailand
Property & Construction
Ananda Development Public
Company Limited
469,000
201,175
227,390
5.13
The Siam Cement Public Company
Limited
3,600
171,354
185,926
4.19
Total quoted investments in Thailand
372,529
413,316
9.32
Total quoted investments
3,067,349
3,438,657
77.50
Net unrealised gain on change in
value of investments
371,308
Fair value of total financial assets
at fair value through profit or
loss
3,438,657
Name of counter
Nominal
Value
Aggregate
cost
Fair value as
at 01.04.2012
Units
RM
RM
% of value of
the fund
Shares quoted in Malaysia Main Market
Trading/Services
MBM Resources Bhd 37,000 170,933 170,200 4.60
Total quoted investments in
Malaysia
170,933
170,200
4.60
Shares quoted in Hong Kong
Consumer Goods -
Automobiles
Zhongsheng Group Holdings
Ltd
33,000
193,526
200,587
5.42
Information Technology –
Software & Services
REXlot Holdings Ltd 700,000 186,193 190,640 5.15
Total quoted investment in Hong Kong
379,719
391,227
10.57
Shares quoted in Indonesia
Finance
PT Astra International Inc 6,500 159,118 160,930 4.35
Finance-Banks
Bank Mandiri TBK PT 83,000 186,812 190,351 5.15
Industrial Products
Tiga Pilar Sejahtera Food Tbk 1,147,375 208,992 195,912 5.30
Plantations
J A Wattie TBK PT 1,147,500 167,389 163,278 4.41
INTERIM REPORT MARCH 2014
Areca growthTRUST Fund
32
Name of counter
Nominal
Value
Aggregate
cost
Fair value as
at 01.04.2012
Units
RM
RM
% of value of
the fund
Shares quoted in Indonesia
Properties
Bumi Serpong Damai TBK 746,500 228,767 322,407 8.71
Total quoted investments in
Indonesia
951,078
1,032,878
27.92
Shares quoted in Singapore
Consumer Goods - Automobiles
QAF Limited 91,000 166,441 166,230 4.50
Industrial Products
Wilmar International Limited 19,000 233,539 226,754 6.13
Oil & Gas
Ezion Holdings Ltd 78,000 186,089 187,127 5.06
Properties
CapitaLand Limited 43,000 301,601 326,760 8.83
Overseas Union Enterprise Ltd 30,000 178,358 171,710 4.64
Total
479,959
498,470
13.47
Trading/Services
Noble Group Ltd 48,000 160,495 161,334 4.36
Total quoted investments in
Singapore
1,226,523
1,239,915
33.52
Total quoted investments –
local
2,728,253
2,834,220
76.61
Net unrealised loss on change
in value of investments
105,967
Fair value of total financial
assets at fair value through
profit or loss
2,834,220
7 CASH AND CASH EQUIVALENTS
31.03.2014 31.03.2013 01.04.2012 RM RM RM
Bank balance with a licensed bank 9,359 5,416 8,090
Deposits with licensed financial institutions 190,056 521,024 1,363,985
199,415 526,440 1,372,075
The effective average rate of deposit placement with a licensed financial institution per annum
as the date of the statement of financial position are as follows:
31.03.2014 31.03.2013 01.04.2012
% % %
Deposits with a licensed financial institution 2.95 1.69 1.06
INTERIM REPORT MARCH 2014
Areca growthTRUST Fund
33
Deposit has an average maturity of 2 days (31.03.2013: 2 days, 01.04.2012: 5 days).
8 UNIT HOLDERS’ CAPITAL
Net Asset Value attributable to unit holders is represented by:
2014 2013
Note RM RM
Unit holders’ capital (a) 2,581,841 4,351,407
Accumulated (losses)/ gain (75,438) 85,164
2,506,403 4,436,571
(a) Number of units in circulation and net assets attributable to unit holders
--------- 2014 --------- --------- 2013 ---------
Units RM Units RM
As at the beginning of the
financial period
7,283,582
3,820,057
6,802,823
3,561,707
Creation arising from application 33,840 17,004 1,669,819 892,948
Release of units (2,471,792) (1,255,220) (185,865) (103,248)
As at the end of the financial
period
4,845,630
2,581,841
8,286,777
4,351,407
Approved size of the Fund 500,000,000 500,000,000
In accordance with the Deed, the Manager may increase the size of the Fund from time to time
with the approval of the Securities Commission Malaysia. The maximum number of units that
can be issued out for circulation is 500,000,000 (2013: 500,000,000; 2012: 500,000,000
units). As at 31 March 2014, the number of unit issued by the Funds is 495,154,370 (2013:
491,713,223; 2012: 492,072,477 units).
9 TRANSACTIONS WITH BROKERS/DEALERS
Details of transactions with the top 10 brokers are as follows:
Name of brokers/dealers
Value of
trades
% of total
trades
Brokerage
Fees
% of total brokerage
fees
RM % RM %
31 March 2014
CIMB Bank Berhad 3,160,000 36.01 - -
CIMB Investment Bank Berhad 2,000,875 22.80 7,241 33.14
J.P. Morgan Securities (Asia
Pacific) Limited
915,926
10.44
3,325
15.22
AmInvestment Bank Berhad 868,384 9.90 2,910 13.32
CLSA Limited 695,206 7.92 3,608 16.51
Credit Suisse (Hong Kong)
Limited 576,282 6.57 2,229 10.20
Macquarie Capital Securities
Limited 558,528 6.36 2,538 11.61
8,775,201 100.00 21,851 100.00
31 March 2013
CIMB Investment Bank Berhad 3,647,910 24.52 17,362 43.42
CIMB Bank Berhad 3,430,000 23.05 - -
J.P. Morgan Securities (Asia
Pacific) Limited 2,747,250 18.46 12,615 31.54
INTERIM REPORT MARCH 2014
Areca growthTRUST Fund
34
Name of brokers/dealers
Value of
trades
% of
total
trades
Brokerage
Fees
% of total
brokerage
fees
Macquarie Capital Securities
Limited
1,321,555
8.88
4,328
10.82
OSK Investment Bank Berhad 1,090,000 7.33 - -
KAF Investment Bank Berhad 1,080,000 7.26 - -
CLSA Limited 765,562 5.14 3,054 7.64
AmInvestment Bank Berhad 423,982 2.85 1,373 3.43
JP Morgan Securities (Malaysia)
Sdn Bhd
373,874
2.51
1,258
3.15
14,880,133 100.00 39,990 100.00
All brokers and dealers highlighted above are not related to the Manager.
10 UNITS HELD BY THE MANAGER
The units are held beneficially by the Manager for bookings purpose, also called the Manager’s
stocks.
There were no units held by the Manager, Directors or parties related to the Manager as of the
date of the unaudited statement of financial position.
11 MANAGEMENT EXPENSE RATIO (“MER”)
2014 2013
% %
MER 1.29 1.69
Management expense ratio includes management fee, Trustee’s fee, and other administrative
expenses which is calculated as follows:
MER = (A + B + C ) x 100
D
A = Management fee
B = Trustee’s fee
C = Administrative expenses
D = Average net asset value of the Fund, calculated on a daily basis
The average net asset value of the Fund for the financial period calculated on a daily basis is
RM3,041,042 (2013: RM3,232,517).
12 PORTFOLIO TURNOVER
2014 2013
The portfolio turnover for the period (times) 0.93 1.44
The portfolio turnover is derived from the following calculation:
(Total acquisition for the period + total disposal for the period) 2
Average net asset value of the Fund for the period calculated on a daily basis
where:
total acquisition for the period = RM2,314,482 (2013: RM4,860,758)
total disposal for the period = RM3,348,630 (2013: RM4,419,375)
13 SEGMENTAL INFROMATION
The external Fund 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
external Fund Manager that are used to make strategic decisions.
INTERIM REPORT MARCH 2014
Areca growthTRUST Fund
35
The Investment 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 Fund trades in a diversified portfolio of equity securities with the objective of providing
investors with an opportunity for capital growth. The Fund is domiciled in Malaysia. All of the
Fund’s income is from investments in entities incorporated in Malaysia and outside Malaysia.
There are 4 unit holders who held more than 10% of the Fund’s net asset value.
The internal reporting provided to the Chief Executive Officer (CEO) for the fund’s assets,
liabilities and performance is prepared on a consistent basis with the measurement and
recognition principles of MFRS and IFRS. The CEO is responsible for the performance of the
Fund and considers the business to have a single operating segment.
The reportable operating segments derive their income by seeking investments to achieve
targeted returns consummate with an acceptable level of risk within each portfolio. These
returns consist of interest income, dividend income, foreign exchange gains/losses and gains
on the appreciation in the value of investments.
There were no changes in the reportable segments during the financial period.
14 SEGMENTAL INFROMATION
Effective from 1 October 2012, the Fund adopted MFRS 1 ‘First-time adoption of MFRS’
(effective 1 January, 2012) for the financial year ended 30 September 2013. The financial
statement of the Fund for the financial year ended 30 September 2013 are the first set of
financial statements prepared in accordance with the MFRS, including MFRS 1 ‘First-time
adoption of MFRS’. The Fund has consistently applied the same accounting policies in its
opening MFRS statement of financial position at 1 October 2011 (transition date) and
throughout all years presented, as if these policies had always been in effect.
(a) MFRS 1 mandatory exceptions
Estimates
MFRS estimates as at transition date is consistent with the estimates as at the same date
made in conformity with FRS.
(b) Explanation of transition from FRS to MFRS
Transition from FRS to MFRS does not have any significant impact on the financial
statements of the Fund.
15 INTERIM ACCOUNTS
The interim accounts for the 6-month period ended 31 March 2014 have not been audited.