Cover AnnualReport Islamic Cash-FA - Areca...
Transcript of 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
Areca Islamic Cash Fund
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
Areca Islamic Cash Fund
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
-
ANNUAL REPORT SEPTEMBER 2017
Areca Islamic Cash Fund
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
-
ANNUAL REPORT SEPTEMBER 2017
Areca Islamic Cash Fund
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) (%)
Please refer to Note 3 for further information
0.87
0.98
Portfolio turnover ratio (PTR) (times)
Please refer to Note 4 for further information
6.20
3.97
-
ANNUAL REPORT SEPTEMBER 2017
Areca Islamic Cash Fund
5
2017
18.6.2015
(date of launch)
to
30.9.2016
TOTAL RETURN
Please refer to Note 5 for further information
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.
-
ANNUAL REPORT SEPTEMBER 2017
Areca Islamic Cash Fund
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
-
ANNUAL REPORT SEPTEMBER 2017
Areca Islamic Cash Fund
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.
-
ANNUAL REPORT SEPTEMBER 2017
Areca Islamic Cash Fund
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.
-
ANNUAL REPORT SEPTEMBER 2017
Areca Islamic Cash Fund
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
To the Unit holders of Areca Islamic Cash Fund
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
-
ANNUAL REPORT SEPTEMBER 2017
Areca Islamic Cash Fund
10
S H A R I A H A D V I S E R ' S R E P O R T
To the Unit holders of Areca Islamic Cash Fund
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
-
ANNUAL REPORT SEPTEMBER 2017
Areca Islamic Cash Fund
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.
-
ANNUAL REPORT SEPTEMBER 2017
Areca Islamic Cash Fund
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.
-
ANNUAL REPORT SEPTEMBER 2017
Areca Islamic Cash Fund
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
-
ANNUAL REPORT SEPTEMBER 2017
Areca Islamic Cash Fund
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.
-
ANNUAL REPORT SEPTEMBER 2017
Areca Islamic Cash Fund
15
STATEMENT OF COMPREHENSIVE INCOME
For The Financial Year Ended 30 September 2017
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
The accompanying summary of significant accounting policies and notes to the financial
statements form an integral part of these financial statements.
-
ANNUAL REPORT SEPTEMBER 2017
Areca Islamic Cash Fund
16
STATEMENT OF CHANGES IN EQUITY
For The Financial Year Ended 30 September 2017
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
The accompanying summary of significant accounting policies and notes to the financial
statements form an integral part of these financial statements.
-
ANNUAL REPORT SEPTEMBER 2017
Areca Islamic Cash Fund
17
STATEMENT OF CASH FLOWS
For The Financial Year Ended 30 September 2017
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
The accompanying summary of significant accounting policies and notes to the financial
statements form an integral part of these financial statements.
-
ANNUAL REPORT SEPTEMBER 2017
Areca Islamic Cash Fund
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
-
ANNUAL REPORT SEPTEMBER 2017
Areca Islamic Cash Fund
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.
-
ANNUAL REPORT SEPTEMBER 2017
Areca Islamic Cash Fund
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.
-
ANNUAL REPORT SEPTEMBER 2017
Areca Islamic Cash Fund
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.
-
ANNUAL REPORT SEPTEMBER 2017
Areca Islamic Cash Fund
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
financial institutions
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.
-
ANNUAL REPORT SEPTEMBER 2017
Areca Islamic Cash Fund
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.
-
ANNUAL REPORT SEPTEMBER 2017
Areca Islamic Cash Fund
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)
-
ANNUAL REPORT SEPTEMBER 2017
Areca Islamic Cash Fund
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
As at 30 September 2017
Financial assets at fair value
through profit or loss:
-Short-term Shariah-based
deposits with licensed
financial institutions
-
43,375,802
-
43,375,802
As at 30 September 2016
Financial assets at fair value through profit or loss:
-Short-term Shariah-based
deposits with licensed
financial institutions
-
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.
-
ANNUAL REPORT SEPTEMBER 2017
Areca Islamic Cash Fund
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 - -
-
ANNUAL REPORT SEPTEMBER 2017
Areca Islamic Cash Fund
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.
-
ANNUAL REPORT SEPTEMBER 2017
Areca Islamic Cash Fund
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
-
ANNUAL REPORT SEPTEMBER 2017
Areca Islamic Cash Fund
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)
-
ANNUAL REPORT SEPTEMBER 2017
Areca Islamic Cash Fund
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.
-
Cover_AnnualReport_Islamic Cash-FABlankAnnual Report Sep2017 Islamic Cash_Final.pdfBlankBlankBlankColour_BackC - new