KAF VISION FUND ANNUAL REPORT 31 MARCH 2016 AR March 20… · KAF VISION FUND ANNUAL REPORT 31...

KAF VISION FUND

ANNUAL REPORT

31 MARCH 2016

For more information,call us at 1-800-88-3065,log on to www.kaf.com.my

KAF Investment Funds Berhad (334195-K)

Level 11, Chulan TowerNo. 3, Jalan Conlay, 50450 Kuala LumpurTel: 03-2171 0559 Fax: 03-2171 0583

KAF INVESTMENT FUNDS BERHAD (334195-K)

1

MANAGER’S REPORT

We are pleased to present the Manager’s Report for the financial year ended 31 March 2016 (the period).

1. Launch Date

KAF Vision Fund (KVF) commenced operations on 1 March 2000 and will continue its operations until terminated according to the Deed dated 24 January 2000, Supplemental Deed dated 20 July 2001, 2nd Supplemental Deed dated 9 January 2014, 3rd Supplemental Deed dated 7 October 2014 and 4th Supplemental Deed dated 12 March 2015 .

2. Type of Fund

Growth Fund.

3. Category of Fund

Equity Small-Cap Fund.

4. Fund’s Objective, Benchmark and Distribution Policy

KVF’s aims to provide unit holders with medium to long-term capital growth.

The Fund’s strategic asset allocation is subject to a maximum of 65% of its net asset value (NAV) in small and medium capitalisation stocks with a market capitalisation not exceeding RM1 billion at the time of purchase. Small and medium capitalisation stocks provide the potential to achieve high capital appreciation and may grow at a faster rate but conversely, market prices of such stocks tend to be more volatile and hence, involve a higher risk. In addition, the Fund can invest up to a maximum 30% of its NAV in large capitalisation stocks with a market capitalisation exceeding RM1 billion at the time of purchase.

The FTSE Bursa Malaysia Emas Index (FBM Emas) is the Fund’s benchmark.

Income distribution (if any) is incidental.

2

MANAGER’S REPORT

3

MANAGER’S REPORT

5. Review of Fund Operations and Performance

For the financial year under review, the Fund based on its NAV per unit, recorded a positive return of 7.18%, compared with the benchmark which declined -5.11%. The Fund’s performance may be attributed to investments benefiting from the exporting theme and a weaker ringgit. With this positive return, the Fund had met its investment objective and recorded capital growth.

The Fund maintained a high equity exposure for most of the period with stock selection made up of a combination of undervalued mid and small-cap stocks and some large cap stocks. KVF’s performance remained positive and has achieved its overall investment objective of providing medium to long-term capital growth.

Since inception, based on its net asset value (NAV), KVF recorded a return of 349.08% compared to its benchmark, the composite FTSE Bursa Malaysia Emas Index which rose by 66.78%. As such, the Fund outperformed its benchmark by 282.30 basis points.

Performance Chart since inception(1 March 2000 – 31 March 2016)

Source: Novagni Analytics and Advisory Sdn Bhd, an independent source.

Past performance is not necessarily indicative of future performance.

KVF’s performance against the Benchmark and Indices of the Bursa Malaysia

Fund/Index 31/03/2015 31/03/2016 Change (%)KVF 81.81sen 87.68sen +7.17FBM Emas Index

(benchmark) 12,563.38 11,920.78 -5.11FBM Small Cap

Index 16,287.03 15,609.69 -4.16FBM-KLCI 1,830.78 1,717.58 -6.18

Fund Performance as ranked by Lipper Asia Limited

Period

KVF

Mean of Equity Malaysia Small & Mid Cap Non-

Islamic Fund Category

%Change Rank

%Change

6 months25/09/2015 – 25/03/2016 4.06 12/15 6.291 year25/03/2015 – 25/03/2016 6.63 4/14 3.143 years25/03/2013 – 25/03/2016 77.94 2/14 44.695 years25/03/2011 – 25/03/2016 94.20 4/13 59.94

Source: The Edge, 4 April 2016 issue, Edge-Lipper Fund Performance Table, an independent source.

During the year under review, KVF realised a total net income of RM8.34 million arising from a net profit of RM6.36 million from disposal of shares and RM1.98 million from dividend and interest income. As at the end of March 2016, the unrealised gain amounted to RM5.09 million. The fund size increased to RM60.67 million as at 31 March 2016, from RM56.98 million as at 31 March 2015. The Fund’s NAV per unit increased to RM0.8768 as at 31 March 2016 from RM0.8181 as at end March 2015 due to the positive fund performance for the year. A combination of trading strategy and good stock selections had contributed to the out-performance of the Fund during the year.

4

MANAGER’S REPORT

5

MANAGER’S REPORT

No dividend has been declared for the financial year ended 31 March 2016.

6. Asset Allocation and Investment Strategies Employed

The period saw strong performance by small-cap stocks. The Fund Manager took opportunity to position the portfolio in thematic ideas such as value and growth driven ideas, Trans Pacific Partnership Agreement (TPPA) and strong USD benefiting exporters. At the same time, we kept the equity exposure high to benefit from the strong momentum of small-cap stocks.

The designated Fund Manager does not employ any other investment strategy apart from the investment strategy stated in the Master Prospectus dated 31 January 2016.

There were no significant changes in the Fund’s state of affairs during the year. Also, there were no circumstances which could materially affect any interest of the unit holders.

Asset Allocation

Asset Class

Percentage of NAVas at

Change in Exposure

over Period (%)31/03/2015 31/03/2016

Equity & derivative securities 88.72% 89.81% +1.09

Liquid assets 11.28% 10.19% - 1.09

Portfolio of Investment and Other Assetsas at 31 March 2016

7. Review of the Stock Market

The stock market activity was buoyant with strong performance by small cap stocks during the period under review. The broader market and the FBM-KLCI continued its uptrend and hit an all-time high of 1,867.53 on 27 April 2015 on the back of buying in blue chip heavy weights in Malaysia. Key events which took place during the March to April period was the rally in US equities on continued improvement in jobless claims, better than expected consumer sentiment and market participants predicting that the US Federal Reserve will raise interest rate in late 2015 instead of earlier expected as it struggles to meet its inflation target and global economic growth remains weak.

On April 2015, the FBM-KLCI hit an index high of 1,867.53 but tumbled to a low of 1,688.44 on June 2015. A decline of -9.59% in three months. The local bourse was weighed down by several key factors that have driven 13 months of consecutive downgrades for market earnings growth (5.7%/8.9% for consensus 2015/2016). These include: 1) potentially weaker consumer demand following GST introduction on 1 April 2015; 2) fallout from weaker global energy prices resulting in lower investments by corporates and lower operating expenditure by Petronas and the Federal Government, and a deteriorating current account; 3) concerns about the banking system and the government’s exposure to debt-laden 1Malaysia Development Berhad (1MDB); and 4) perceived weak leadership of the government, given the current infighting within the ruling coalition. At the same time, Malaysia has been experiencing a constant outflow of foreign portfolio funds since July 2014, as capital markets brace for a stronger US dollar, with the Federal Reserve expected to raise rates for the first time in six years (since the global financial crisis) with the ringgit now close to a nine-year low of RM3.75/US$.

During the 3rd quarter of 2015, the local bourse was weighed down with the global equity market rout as China’s surprise currency devaluation and rising concerns over its growth momentum spooked investors. Foreign net sell for YTD (as at Sept) has total a sizeable MYR16.3bn or 2.4x of 2014’s MYR6.9bn. In local currency terms, the FBM-KLCI has fallen by -19.4% from its peak on 27 April 2015, hitting its lowest point of 1,503.68 on 25 August 2015.

6

MANAGER’S REPORT

7

MANAGER’S REPORT

During the 4th quarter of 2015, the stock market continued to trend sideways for the period. The capital market’s reaction to both external and domestic issues were predictably negative. Persistent concerns of a shrinking current account amid the plunge in crude oil price has precipitated a further RM23b foreign equity outflow since the start of 2015. Domestically, domestic demand continued to weakened further, dampening by the sharp depreciation of the ringgit that will hurt business and consumer confidence, choking private spending. Consumer spending was badly shaken by the GST with its growth slowing significantly from 6.4% y-o-y in 2Q to a low of 4.1% in 3Q. Meanwhile, corporates in Malaysia continue to report a slower declined in earnings momentum.

During the 3Q 2015 reporting season, 51% of reporting companies’ earnings were in-line or above consensus expectations. This was a notable improvement on 2Q 2015 - when 68.75% of companies missed consensus expectations, 18.75% were in-line and only 12.5% beat expectations. Meanwhile, the PM Najib said Government-linked companies (GLCs) are planning to bring back overseas assets amounting to RM627m in the 2H15 under the GLC Transformation program. Some notable transactions in the 4th quarter shows that foreign direct investors are becoming more active in Malaysia. Airport services and food processor conglomerate SATS’ acquisition of a 49% stake in Kuala Lumpur-based Brahim’s Airline Catering for an initial consideration of RM110m. The sale of IMDB’s Edra Energy to China General Nuclear Corp (CGNC) for an equity value of MYR9.83bn helped shored up the Ringgit sentiment with an intraday movement of 1.4% on 24 November. As a sign of confidence investing in Malaysia, China has given an undertaking to buy Malaysian government bonds and will also be providing a 50bn yuan (RM33bn) quota for local institutional funds to purchase equities and bonds directly in the world’s second largest economy. The stock market for the quarter fared better than the earlier quarters as on stabilization of oil prices and better palm oil prices were factors that helped the Ringgit. The ringgit weakness has boosted returns in the exporters in Malaysia.

Domestically, besides consumption slowdown, credit growth normalisation, and depressed commodities prices, investors’ sentiment was also hurt by political uncertainty and controversy of 1MDB, leading to large capital outflows. Investors remain jittery over the prospects of capital controls/currency peg to stem further outflow and MYR depreciation despite the central bank governor’s assurances otherwise. Market sentiment did temporarily improved following several broad measures to strengthen Malaysia’s domestic economy.

The first is to reactivate Valuecap with a fresh RM20bn fund to support undervalued stocks on the FBM-KLCI. Second, the government has urged the government-linked companies (GLC) and government-linked investment companies (GLIC) to re-invest gains from their overseas investments back into local projects with high multiplier effects. Other measures announced include: 1) allowing the rescheduling and restructuring of loans to the SME sector; 2) visa exemption for tourists from China beginning 1 October 2015 for a period of six months; 3) import duty exemptions covering consumable spare parts and research apparatus used in the manufacturing sector; and 4) additional allocation of RM1bn to the Domestic Investment Strategic Fund, aimed at accelerating local companies transitioning into high value-added/innovation-based industries. Meanwhile, Brent crude oil and crude palm oil (CPO) prices continue to head southwards. YTD, both commodities have fallen 17% and 11% respectively. Note that both petroleum and palm oil-related products collectively make up 23.7% of Malaysia’s exports in 1H15. The outflow of both equity and debt capital has contributed to the recent sharp decline in USD/MYR exchange rate. Over a 12-month period, MYR has depreciated by 37% to 4.46 as of 30 September 2015. This in turn has raised investors’ concerns over whether Malaysia will implement capital controls and currency peg in order to stem a further outflow of funds.

8

MANAGER’S REPORT

9

MANAGER’S REPORT

The stock market kick started the year on a volatile foot into the new 2016 year. The FBM-KLCI sold off for the month of January 2016 on the back of regional bourses selling off on China’s growth fears and RMB weakness and outflow. The Shanghai composite index limiting down by 7% on the first trading day. Meanwhile, US and European stocks too had heightened volatility led to more headaches for Asian equities. Domestically, the government announced a revision to the 2016 budget in response to a slowing domestic and global economic growth. The government targets a series of restructuring steps which is expected to save MYR9b and maintain the 2016 fiscal deficit target of 3.1% of Gross Domestic Product (GDP). Separately, Parliament passed a motion allowing Malaysia’s participation in the Trans-Pacific Partnership Agreement, moving the country a step forwards towards signing and ratifying the trade accord bringing together 12 nations. In February, the FBM-KLCI traded sideways in tandem with the Ringgit’s lackluster movement on oil and global macro factors. The corporate reporting season was underway with little excitement as most Malaysian corporates reported disappointing earnings.In March, the market continued to trend upwards with foreign funds were net buyers up for the month at RM401.36m while local institutions were net sellers at RM372.4m and local retail investors selling RM28.95m according to data compiled by Bursa Malaysia All in, the FBM-KLCI closed the quarter on positive note following a global markets rally on statement by the Federal Reserve Janet Yellen that interest rates hikes would be gradual.

8. Market Outlook and Strategy

We remain cautiously optimistic on Malaysia’s stock market and economy. Despite the near term relief rally on the FBM-KLCI on the back of oil and ringgit rally, we believe challenges remained going in to the next 9 months of 2016. The global economy is still faced with downside risk as major economies, with the exception of the US, are still struggling and the US interest rate hike will likely cause financial volatility not only in developed world but also in emerging markets. The near term dovishness of the Federal Reserves has boosted the appeal of risky assets in global markets. We believe there is potential upside for the stock exchange if oil and ringgit remains stable for the remaining part of 2016. The World Bank expects Malaysia to record 4.7% growth this year and close to 4.2% in 2016 before gradually rising again in 2017. Malaysia’s current policies provided a good base, to navigate the global uncertainties, it needed to consider further improving public sector performance, accelerate human capital development and re-engineer economic growth.

9. Analysis of Unit Holders

Size of HoldingsNo. of Unit

HoldersNo. of Units

Held5,000 and below 719 2,002,9335,001 to 10,000 536 3,964,31110,001 to 50,000 1,298 29,470,45350,001 to 500,000 298 29,449,360500,001 and above 4 3,650,448Total 2,855 68,537,505

Note: The above is excluding the Manager’s stock.

10

MANAGER’S REPORT

11

KEY PERFORMANCE DATA

Portfolio CompositionAs at 31 March

2016 2015 2014(Percentage of NAV)

% % %Quoted EquitiesConstruction & Building

Material 8.69 11.41 4.82 Consumer Products 27.18 24.51 0.71Industrial

Manufacturing 17.38 16.76 12.96Properties 5.15 7.50 9.90Oil & Gas - - 17.28Utilities - - 0.55Trading/Services 15.78 14.24 7.55REITs - - 0.90Special Purpose

Acquisition Company - - 1.29Finance & Insurance 10.81 5.15 6.93Infrastructure Project

Companies - - 0.65Transportation - - 1.11Technology 4.82 9.15 8.56Plantations & Timber - - 0.55Total Quoted Equities 89.81 88.72 73.76

Cash and Other Assets 10.19 11.28 26.24Total 100.00 100.00 100.00

Total return for the year RM RM RMCapital growth (1,116,650) 396,728 2,208,229Income distribution 5,579,856 7,157,040 10,972,468

Performance Income Capital Annual Total ReturnReturn Return KVF Benchmark

% % % %Financial year

ended31/03/2016 - 7.18 7.18 (5.11)31/03/2015 - 16.19 16.19 (1.83)31/03/2014 - 42.11 42.11 12.0631/03/2013 - 9.01 9.01 4.4031/03/2012 - (0.97) (0.97) 3.08

Average Total ReturnKVF Benchmark% %

One (1) year 7.18 (5.11)Three (3) years 25.66 1.46Five (5) years 18.21 2.47

Note: Basis of calculation is in line with the compilation method used by Novagni Analytics & Advisory Sdn Bhd, an independent source.

10. Policy on Stockbroking Rebates and Soft Commission

The Securities Commission’s (SC) guidelines states that a management company, a trustee or its delegate should not retain any rebate from or otherwise share in any commission with any broker/dealer in consideration for directing dealings in a fund’s property. Any rebate or shared commission should be directed to the account of the fund concerned. Hence, the Manager will credit all stockbroking rebates to KVF’s account.

The SC’s guidelines further states that goods and services (soft commissions) provided by any broker/dealer may be retained by a management company or its delegate, but only if the goods and services are of demonstrable benefit to unit holders.

During the financial year under review, the management company received soft commissions in the form of financial wire services and a stock quotation system incidental to the investment management of the Fund.

12 13

KEY PERFORMANCE DATA

As at 31 March2016 2015 2014

NAV and Units in CirculationTotal NAV (RM) 60,670,588 56,975,575 43,530,386Units in circulation 69,192,538 69,641,667 61,826,667NAV per unit (RM) 0.8768 0.8181 0.7041

Unit Prices for the year (RM per unit)NAV (year high) 0.9531 0.8181 0.8552NAV (year low) 0.7868 0.6597 0.6223NAV (year high,

ex-distribution) Nil Nil NilNAV (year low,

ex-distribution) Nil Nil NilNAV 0.8768 0.8181 0.7041

Distributions Nil Nil Nil

Unit split Nil Nil 1:3

Management Expense Ratio (MER) 1.87% 1.68% 1.69%

Portfolio Turnover Ratio (PTR) 4.55 times 3.12 times 0.89 times

Note: Management Expense Ratio (MER) is calculated by taking the total fees and recovered expenses incurred by the Fund divided by the average fund size. Portfolio Turnover Ratio (PTR) is calculated by taking the average of the acquisition and disposal of the Fund divided by the average Fund size.

The MER was higher than the previous year due to increase in total fees and recovered expenses (refer to Note 14).

The PTR increased to 4.55 times for the year under review mainly due to the increase in portfolio rebalancing activities by the Fund (refer to Note 15).

Past performance is not necessarily indicative of future performance. Unit prices and investment returns may go down, as well as up.

TRUSTEE’S REPORT

TO THE UNIT HOLDERSOF KAF VISION FUND

We have acted as Trustee of KAF Vision Fund (the Fund) for the financial year ended 31 March 2016. In our opinion and to the best of our knowledge, KAF Investment Fund Berhad, (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 Deeds, the Securities Commission’s Guidelines on Unit Trust Funds, the Capital Markets and Services Act 2007 and other applicable laws;

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

(c) creation and cancellation of units are carried out in accordance with the Deeds and relevant regulatory requirements.

For and on behalf ofRHB TRUSTEES BERHAD (Company No:573019-U)

TONY CHIENG SIONG UNGDirector

Kuala Lumpur30 May 2016

14 15

INDEPENDENT AUDITORS’ REPORTSTATEMENT BY THE MANAGER

TO THE UNIT HOLDERS OFKAF VISION FUND

We, Tan Sri Abu Talib Othman, and Datuk Khatijah Ahmad, two of the Directors of KAF Investment Funds Berhad, do hereby state that, in the opinion of the Manager, the audited financial statements set out on pages 17 to 66 are drawn up in accordance with the provisions of the Deeds and give a true and fair view of the financial position of the Fund as at 31 March 2016 and of its financial performance, changes in equity and cash flows of the Fund for the financial year ended on that date in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards.

For and on behalf of the ManagerKAF Investment Funds Berhad

Tan Sri Abu Talib Othman Datuk Khatijah AhmadDirector Director

Kuala Lumpur, Malaysia30 May 2016


REPORT ON THE FINANCIAL STATEMENTS

We have audited the financial statements of KAF Vision Fund in pages 17 to 66 which comprise the statement of financial position as at 31 March 2016 of the Fund, and the statements of comprehensive income, changes in equity and cash flows of the Fund for the financial year ended 31 March 2016, and a summary of significant accounting policies and other explanatory notes, as set out on Notes 1 to 16.

Manager’s Responsibility for the Financial Statements

The Manager is responsible for the preparation of financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards, and for such internal control as the Manager determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

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

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

16 17

STATEMENT OF COMPREHENSIVE INCOMEFOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

INDEPENDENT AUDITORS’ REPORT


REPORT ON THE FINANCIAL STATEMENTS (CONT’D)

Auditors’ Responsibility (cont’d)

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

Opinion

In our opinion, the financial statements have been drawn up in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards so as to give a true and fair view of the financial position of the Fund as of 31 March 2016 and of its financial performance, change in equity and cash flows for the financial year then ended.

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 Lumpur30 May 2016

Note 2016 2015RM RM

INCOMEGross dividend income 1,861,607 1,195,105Interest income 119,267 180,979Net gain on financial

assets at fair value through profit or loss 6 5,247,290 7,884,259

7,228,164 9,260,343

EXPENSESManager’s fee 3 (928,187) (723,225)Trustee’s fee 4 (43,315) (43,182)Transaction costs (1,673,660) (900,434)Audit fee (4,200) (4,200)Tax agent’s fee (10,450) (5,250)Other expenses (105,730) (29,511)

(2,765,542) (1,705,802)

NET INCOME BEFORE TAXATION 4,462,622 7,554,541

TAXATION 5 584 (773)

NET INCOME AFTER TAXATION AND TOTAL COMPREHENSIVE INCOME 4,463,206 7,553,768

Net income after taxation is made up of the following:

Realised amount 5,579,856 7,157,040Unrealised amount (1,116,650) 396,728

4,463,206 7,553,768

The accompanying notes form an integral part of the financial statements.

18 19

STATEMENT OF FINANCIAL POSITIONAS AT 31 MARCH 2016

Note 2016 2015RM RM

ASSETS

CURRENT ASSETSFinancial assets at fair

value through profit or loss 6 54,488,128 50,544,109

Cash at bank 7 15,200 1,870,441Deposits with licensed

financial institutions 7 5,122,969 3,246,274Amount due from

Manager - creation of units 549,625 114,538

Amount due from Stockbrokers 8 2,620,265 3,333,020

Other receivables 9 135,970 86,190Tax recoverable - 22,370TOTAL ASSETS 62,932,157 59,216,942

LIABILITIES

CURRENT LIABILITIESAmount due to

Stockbrokers 8 2,153,563 2,137,008Amount due to Manager

- Manager’s fees 78,875 73,241Amount due to Trustee 3,681 3,418Other payables and

accruals 10 25,450 27,700TOTAL LIABILITIES 2,261,569 2,241,367

NAV OF THE FUND 60,670,588 56,975,575

EQUITYUnit holders’ capital 23,917,396 24,685,589Retained earnings 36,753,192 32,289,986TOTAL NET ASSETS

ATTRIBUTABLE TO UNIT HOLDERS 60,670,588 56,975,575

NUMBER OF UNITS IN CIRCULATION 11 69,192,538 69,641,667

NAV PER UNIT 0.8768 0.8181


STATEMENT OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

Unit holders’ RetainedCapital Earnings Total

RM RM RM

BALANCE AS AT 1 APRIL 2015 24,685,589 32,289,986 56,975,575

Movement in unit holders’ contribution:

Creation of units arising from application 21,678,465 - 21,678,465

Cancellation of units (22,446,658) - (22,446,658)

(768,193) - (768,193)

Total comprehensive income for the financial year - 4,463,206 4,463,206

BALANCE AS AT 31 MARCH 2016 23,917,396 36,753,192 60,670,588

BALANCE AS AT 1 APRIL 2014 18,794,168 24,736,218 43,530,386

Movement in unit holders’ contribution:

Creation of units arising from application 14,744,335 - 14,744,335

Cancellation of units (8,852,914) - (8,852,914)

5,891,421 - 5,891,421

Total comprehensive income for the financial year - 7,553,768 7,553,768

- 7,553,768 7,553,768

BALANCE AS AT 31 MARCH 2015 24,685,589 32,289,986 56,975,575


20 21

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESFOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

STATEMENT OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

Note 2016 2015RM RM

CASH FLOWS FROM OPERATING ACTIVITIES

Proceeds from sale of investments 268,730,951 144,408,510

Purchase of investments (268,372,030) (156,663,552)Dividends received 1,811,827 1,131,372Interest received 119,267 180,979Tax refund 22,955 -Manager’s fee paid (922,553) (706,883)Trustee’s fee paid (43,053) (43,558)Payment of other fees and

expenses (122,629) (27,711)Net cash generated from/

(used in) operating activities 1,224,735 (11,720,843)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from creation of units 21,243,377 14,629,798

Payments for cancellation of units (22,446,658) (9,774,916)

Net cash (used in)/generated from financing activities (1,203,281) 4,854,882

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 21,454 (6,865,961)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE FINANCIAL YEAR 5,116,715 11,982,676

CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR 7 5,138,169 5,116,715

ANALYSIS OF CASH AND CASH EQUIVALENTSDeposits with licensed

financial institutions 5,122,969 3,246,274Cash at bank 15,200 1,870,441

7 5,138,169 5,116,715


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 THE FINANCIAL STATEMENTS

The financial statements have been prepared in accordance with the provisions of the Malaysian Financial Reporting Standards (MFRS) and International Financial Reporting Standards (IFRS).

The financial statements have been prepared under the historical cost convention, as modified by the revaluation of 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 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.

Estimates and judgements 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.

22


23


A BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (CONT’D)

(i) The new standards, amendments and interpretations to published standards have been adopted by the Fund for the first time for the financial year beginning on or after 1 April 2015:

Amendment to MFRS 132 “Financial Instruments: Presentation” 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 equivalent to net settlement will satisfy the MFRS 132 offsetting criteria.

The adoption of the amendment is not expected to have a significant impact on the results of the Fund.

Annual improvements 2010 - 2012

MFRS 13 ‘Fair value’ - The basis for conclusions on MFRS 13 is amended to clarify that MFRS 13 did not intend to remove the ability to measure short-term receivables and payables at invoice amounts where the effect of discounting is immaterial.

MFRS 124 ‘Related party disclosures’ is amended to include an entity that provides key management personnel services to the reporting entity or to the parent of the reporting entity (the ‘management entity’) as a related party. Disclosure of the amounts charged to the reporting entity is required.


MFRS 13 ‘Fair value measurement’ is amended to clarify that the portfolio exception in MFRS 13 applies to all contracts (including non-financial contracts) within the scope of MFRS 139 or MFRS 9.


(ii) The new standards, amendments and interpretations 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 April 2016 :


MFRS 7 ‘Financial instruments: Disclosures’ introduces two amendments:

Servicing contracts: If an entity transfers a financial asset to a third party under conditions which allow the transferor to derecognise the asset, MFRS 7 requires disclosure of all types of continuing involvement that the entity might still have in the transferred assets. The standard provides guidance about what is meant by continuing involvement. The amendment is prospective with an option to apply retrospectively. There is a consequential amendment to MFRS 1 to give the same relief to first time adopters.

Interim financial statements: The amendment clarifies that the additional disclosure required by the amendments to MFRS 7 ‘Disclosure - Offsetting financial assets and financial liabilities’ is not specifically required for all interim periods unless required by MFRS 134. This amendment is retrospective.

24


25



(ii) The new standards, amendments and interpretations to published standards which are relevant to the Fund but not yet effective and have not been early adopted are as follows: (cont’d)

b) Financial year beginning on/after 1 April 2018:

MFRS 15 “Revenue from Contracts with Customers” deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The standard replaces MFRS 118 “Revenue” and MFRS 111 “Construction Contracts” and related interpretations.

The Fund will apply this standard when effective. This standard is not expected to have a significant impact on the Fund’s financial statements.

MFRS 9 ‘Financial Instruments’ will replace MFRS 139 “Financial Instruments: Recognition and Measurement”. The complete version of MFRS 9 was issued in November 2014.



b) Financial year beginning on/after 1 April 2018: (cont’d)

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 contractual cash flow characteristics of the financial asset. Investments in equity instruments are always measured at fair value through profit or loss with a 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 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.

There is now a new expected credit losses model on impairment for all financial assets that replaces the incurred loss impairment model used in MFRS 139. The expected credit losses model is forward-looking and eliminates the need for a trigger event to have occurred before credit losses are recognised.

26


27




b) Financial year beginning on/after 1 April 2018: (cont’d)

Unless otherwise disclosed, the above standards, amendments to published standards and interpretations to existing standards are not anticipated to have any significant impact on the financial statements of the Fund in the year of initial application.

B INCOME RECOGNITION

Dividend income is recognised on the ex-dividend date, when the right to receive the dividend has been established.

Interest income on deposits with licensed financial institution is recognised on effective interest method on an accrual basis.

Realised gains or losses on sale of investments are accounted for as the difference between the net disposal proceeds and the carrying amount of the investments, which is determined on a weighted average cost basis.

C DISTRIBUTION

The proposed distributions to unit holders are recognised in the statement of changes in equity upon approval by the Manager and Trustee.

D TAXATION

Current tax expense is determined according to the Malaysian tax laws and includes all taxes based upon the taxable profits.

E 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.

F FINANCIAL ASSETS AND LIABILITIES

(i) Classification

The Fund designates its investment in quoted securities 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 principally for the purpose of selling or repurchasing in the near term and their performance evaluated on a fair value basis.

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 receivables comprise cash and cash equivalents, amount due from Manager, amount due from stockbrokers and dividend receivables which are all due within 12 months.

Financial liabilities are classified according to substance of the contractual arrangements entered into and the definitions of financial liability.

The Fund classifies amount due to Manager, amount due to stockbrokers, accrued management fees, amount due to Trustee, other payables and distribution payable as other financial liabilities.

28


29


F FINANCIAL ASSETS AND LIABILITIES (CONT’D)

(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 are initially recognised at fair value. Transaction costs are expensed in the statement of comprehensive income.

Financial assets are derecognised 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 derecognised when it is extinguished, i.e. when the obligation specified in the contract is discharged or cancelled or expires.

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 on financial assets at fair value through profit or loss’ in the period in which they arise.

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.

In accordance to the Deeds, quoted investments in Malaysia are valued at the last done market price quoted on the Bursa Malaysia Securities Berhad (Bursa Securities) at the date of the statement of financial position. Last traded market price quoted on respective foreign stock exchanges at the close of the business day of the respective foreign stock exchanges for foreign quoted investments are utilised, where the last market traded price falls within the bid-ask spread. In circumstances where the last traded market price is not within the bid-ask spread, the Manager will determine the point within the bid-ask spread that is most representative of the fair value.

F FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONT’D)

(ii) Recognition and measurement (cont’d)

Unrealised gains or losses from changes in the fair value of the investments are presented in the statement of comprehensive income and are not distributable.

Loans and receivables 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 profit or loss. If ‘loans 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.

30


31


F FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONT’D)

(ii) Recognition and measurement (cont’d)

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 CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash and bank balances, and deposits held in highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

H AMOUNT DUE FROM/(TO) STOCKBROKERS

Amounts due from/(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.

H AMOUNT DUE FROM/(TO) STOCKBROKERS (CONT’D)

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 brokers is established when there is objective evidence that the Fund will not be able to collect all amounts due from the relevant broker. Significant financial difficulties of the broker, probability that the broker will enter bankruptcy or financial reorganisation, and default in payments are considered indicators that the amount due from brokers 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.

I TRANSACTION COSTS

Transaction costs are costs incurred to acquire or dispose financial assets or liabilities at fair value through profit or loss. They include fees and commissions paid to agents, advisors, brokers and dealers. Transaction costs, when incurred, are immediately recognised in the statement of comprehensive income as expenses.

32


33


J CREATION AND CANCELLATION OF UNITS

The Fund issues cancellable units, which are cancelled at the holder’s option and are classified as equity. Cancellable units can be put back 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 as at the date of the statement of financial position if the holder exercises the right to put the units back to the Fund.

Units are created and cancelled at the holder’s option at prices based on the Fund’s NAV per unit at the time of creation or cancellation. The Fund’s NAV is calculated by dividing the net assets attributable to unit holders with the total number of outstanding units.

K UNIT HOLDERS’ 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 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 of the Fund.

L SEGMENTAL INFORMATION

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 investment team of the Manager that makes strategic decisions for the Fund.

M CRITICAL ACCOUNTING ESTIMATES AND JUDGMENT 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 contents 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 judgements 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.

There are no areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements.

34

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 MARCH 2016

35


1. THE FUND, THE MANAGER AND THEIR PRINCIPAL ACTIVITIES

KAF Vision Fund (the Fund) was constituted pursuant to a Deed dated 24 January 2000 (the Deed), between KAF Investment Funds Berhad (the Manager) and Malaysian Trustees Berhad (the Trustee). The name of the Fund has been changed via a Second Supplemental Trust Deed dated 9 January 2014 from Alliance Vision Fund to KAF Vision Fund. This is in line with changes in the shareholding of the company. The Fund’s Trustee has been changed from Malaysia Trustees Berhad to RHB Trustees Bhd via a Third Supplemental Deed dated 7 October 2014.

The principal activity of the Fund is to invest in “Permitted Investments” as defined under Article 7 of the Deed, which includes stocks and shares of companies quoted on Bursa Malaysia Securities Berhad (Bursa Malaysia) and short term investment. The Fund commenced operations on 1 March 2000 and will continue its operations until terminated according to the conditions in the Deed.

The Manager, KAF Investment Funds Berhad, is incorporated in Malaysia. Its principal activities are the management of unit trust funds, provision of fund management and investment advisory services.

The principal place of business of the Manager is located at Level 11, Chulan Tower, No. 3 Jalan Conlay, 50450 Kuala Lumpur.

2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Fund is exposed to a variety of risks which include market risk (including price risk and interest rate risk), liquidity risk, credit risk, non-compliance risk and capital risk from the following financial instruments.

Financial risk management is carried out through internal control processes adopted by the Manager and adherence to the investment restrictions as stipulated in the Master Prospectus and Securities Commission’s (SC) Guidelines on Unit Trust Funds.

2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D)

Financial instruments of the Fund as at year end are as follow:-

Financialinstrumentsinstruments

at fairvalue

throughprofit or

loss

Otherfinancial

instrumentscarried at

amortisedcost Total

RM RM RM

31 March 2016Financial assets

designated at fair value through profit or loss 54,488,128 - 54,488,128

Deposits with licensed financial institutions - 5,122,969 5,122,969

Cash at Bank - 15,200 15,200Amount

due from stockbrokers - 2,620,265 2,620,265

Amount due from Manager - creation of units - 549,625 549,625

Other assets - 135,970 135,97054,488,128 8,444,029 62,932,157

Amount due to Manager - Manager’s fee - 78,875 78,875

Amount due to Trustee - 3,681 3,681

Amount due to stockbrokers - 2,153,563 2,153,563

Other payables and accruals - 25,450 25,450

- 2,261,569 2,261,569

36


37



Financial instruments of the Fund as at year end are as follow:- (cont’d)

Financialinstrumentsinstruments

at fairvalue

throughprofit or

loss

Otherfinancial

instrumentscarried at

amortisedcost Total

RM RM RM

31 March 2015Financial assets

designated at fair value through profit or loss 50,544,109 - 50,544,109

Deposits with licensed financial institutions - 3,246,274 3,246,274

Cash at Bank - 1,870,441 1,870,441Amount

due from stockbrokers - 3,333,020 3,333,020

Amount due from Manager - creation of units - 114,538 114,538

Other assets - 86,190 86,190Total 50,544,109 8,650,463 59,194,572

Amount due to Manager - Manager’s fee - 73,241 73,241

Amount due to Trustee - 3,418 3,418

Amount due to stockbrokers - 2,137,008 2,137,008


- 2,241,367 2,241,367


Market risk

(a) Price risk

The Fund is exposed to equity securities price risk because of investments held by the Fund and classified as fair value through profit or loss. Price risk is the risk that the fair value of an investment will fluctuate because of changes in market prices (other than those arising from interest rate risk). Such fluctuation may cause the Fund’s NAV and price of units to fall as well as rise, and income produced by the Fund may also fluctuate. The price risk is managed through diversification and selection of securities and other financial instruments within specified limits according to the Deed.

The table below shows the assets of the Fund as at 31 March which are exposed to price risk.

2016 2015RM RM

Quoted InvestmentLocal equities

designated at fair value 54,488,128 50,544,109

The following table summarises the sensitivity of the Fund’s investments to price risk movements as at 31 March. The analysis is based on the assumptions that the market price increased and decreased by 5% (2015: 5%) with all other variables held constant and that fair value of the Fund’s investments moved according to the historical correlation of the index. Disclosures below are shown in absolute terms, changes and impacts could be positive or negative.

38


39



Market risk (cont’d)

(a) Price risk (cont’d)

Change inprice

Impact onprofit

beforetax/NAV

% RM2016Local equities

designated at fair value 5 2,724,406

2015Local equities

designated at fair value 5 2,527,205

(b) Interest rate risk

Interest rate risk is the risk that the value of the Fund will fluctuate because of changes in market interest rates.

The Fund’s exposure to the interest rate risk is mainly confined to short-term placements with licensed financial institutions. Interest rate risk is actively managed by duration targeting based on the interest rate outlook. The Manager overcomes the exposure of short-term deposits by way of maintaining deposits on a short-term basis.


Market risk (cont’d)

(b) Interest rate risk (cont’d)

The effective weighted average interest rate of deposit placements with a licensed financial institution per annum as at the date of the statement of financial position and the average remaining maturities of the deposit are as follows:

WeightedAverage

Interest Rates

Average RemainingMaturities

2016 2015 2016 2015% % Days Days

Deposits with licensed financial institutions 3.22 3.22 3 2

Liquidity risk

Liquidity risk is the risk that the Fund will encounter in meeting its financial obligations. The Manager manages this risk by maintaining sufficient level of liquid assets to meet anticipated payment and cancellations of unit by unit holders, liquid assets comprise cash, deposits with licensed financial institutions and other 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. The amounts in the table below are the contractual undiscounted cashflows.

40


41



Liquidity risk (cont’d)

Less than

Between1 monthto 1 year Total

RM RM RM

As at 31 March 2016

Amount due to brokers 2,153,563 - 2,153,563

Amount due to Manager - Manager’s fees 78,875 - 78,875

Amount due to Trustee 3,681 - 3,681


Contractual cash outflows 2,236,119 25,450 2,261,569

As at 31 March 2015

Amount due to brokers 2,137,008 - 2,137,008

Amount due to Manager - Manager’s fees 73,241 - 73,241

Amount due to Trustee 3,418 - 3,418


Contractual cash outflows 2,213,667 27,700 2,241,367


Credit risk

Credit risk refers to the inability of an issuer or counterparty to make timely payments of interest, principals and proceeds from realisation of investment. The Manager manages the credit risk by undertaking credit evaluation to minimise such risk.

Credit risk arising from placements on deposits in licensed financial institutions is managed by ensuring that the Fund will only place deposits in reputable licensed financial institutions.

The settlement terms of the proceeds from the creation of units receivable from the Manager and redemption of units payable to the Manager are governed by the SC’s Guidelines on Unit Trust Funds.

The maximum exposure to credit risk before any credit enhancements is the carrying amount of the financial assets as set out below:

2016 2015RM RM

Cash & cash equivalents 5,138,169 5,116,715Other assets 3,305,860 3,533,748

8,444,029 8,650,463

42


43



Credit risk (cont’d)

The following table sets out the credit risk concentration of the Fund:

Cash and cash

equivalentsOtherassets Total

RM RM RM

As at 31 March 2016

Finance- A1 5,122,969 - 5,122,969- AAA 15,200 - 15,200Others-not

rated - 3,305,860 3,305,8605,138,169 3,305,860 8,444,029

As at 31 March 2015

Finance- A1 5,116,715 - 5,116,715Others-not

rated - 3,533,748 3,533,7485,116,715 3,533,748 8,650,463

None of these assets are past due or impaired.

Non-compliance risk

The risk arising from non-conformance with regulations and internal policies and procedures by the Manager due to situation such as system failures and oversight may adversely affect the investment of Unit Holders. The non-compliance may also expose the unit trust fund to higher risks that may result in a fall in the value of the unit trust fund. The risk can be mitigated by the internal controls and compliance monitoring undertaken by the Manager.


Capital risk management

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 unit holders and to maintain a strong capital base to support the development of the investment activities of the Fund.

Fair value estimation

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 and liabilities traded in active market (such as publicly traded derivatives and trading securities) are based on quoted market prices at the close of trading on the year end date.

An active market is a market in which transactions for the assets and liabilities take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

The fair value of financial assets and liabilities that are not traded in an active market is determined by using valuation techniques.

The carrying values of cash and cash equivalents, and all current liabilities are reasonable approximation of their fair values due to their short-term nature.

44


45



Fair value estimation (cont’d)

Fair value hierarchy

The Fund classifies 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:

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

• Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).

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

The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability.

The determination of what constitutes ‘observable’ requires significant judgement 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.



Fair value hierarchy (cont’d)

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 TotalRM RM RM RM

As at 31 March 2016

Financial asset at fair value through profit or loss at inception- Quoted

securities 54,488,128 - - 54,488,12854,488,128 - - 54,488,128

As at 31 March 2015

Financial asset at fair value through profit or loss at inception- Quoted

securities 50,544,109 - - 50,544,10950,544,109 - - 50,544,109

46


47




Fair value hierarchy (cont’d)

Investments whose values are based on quoted market prices in active markets, and are therefore classified within Level 1, include active listed equities, exchange traded funds and exchange traded derivatives. Investment in collective investment schemes, i.e. unit trust funds whose values are based on published prices in active markets is also classified within Level 1. The Fund does not adjust the quoted prices for these instruments.

Financial instruments that trade in markets that are 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. These include investment-grade corporate bonds, commercial papers, the Malaysian Government Securities and interest rate swap and forward currency contracts. 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.

The Fund’s policies on valuation of these financial assets are stated in Note F.

3. MANAGER’S FEE

Clause 14.1.2 of the Deed provides that the Manager is entitled to an annual management fee at a rate not exceeding 1.5% per annum based on the Fund’s NAV before deducting the Manager’s and Trustee’s fee for that particular day. The management fee provided in the financial statements is computed on this basis at 1.5% per annum.

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

4. TRUSTEE’S FEE

Clause 14.2.2 of the Deed provides that the Trustee is entitled to an annual trustee fee at a rate not exceeding 0.1% per annum based on the Fund’s NAV before deducting the Manager’s and Trustee’s fee calculated for that particular day and subject to a minimum of RM18,000 per annum.

Effective from 1 December 2014 onwards, the rate has been revised to 0.07% due to change of Trustee from Malaysian Trustees Berhad to RHB Trustees Berhad (before 1 December 2014 : 0.1%) per annum on the NAV of the Fund calculated on daily basis.

There will be no further liability to the Trustee in respect of the trustee fee other than the amounts recognised above.

5. TAXATION

2016 2015RM RM

Current taxation- Malaysia taxation - -(Over)/under provision in

prior year (584) 773(584) 773

48


49


5. TAXATION (CONT’D)

The numerical reconciliation between net income before taxation multiplied by the Malaysian statutory tax rate and tax expense of the Fund is as follows:

2016 2015RM RM

Net income before taxation 4,462,622 7,554,541

Taxation at Malaysian statutory rate of 24% (2015: 25%) 1,071,029 1,888,635

Tax effects of:Income not subject to tax (1,734,759) (2,089,977)Expenses not deductible

for tax purposes 434,315 13,492Restriction on tax

deductible expenses for unit trust funds 229,415 187,850

(Over)/under provision in prior year (584) 773

Tax (income)/expenses (584) 773

6. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

2016 2015RM RM

Net gains recognised in relation to financial assets at fair value through profit or loss:

- realised 6,363,940 7,487,531- unrealised (1,116,650) 396,728

5,247,290 7,884,259

Designated at fair value through profit or loss at inception:

- Quoted investments 54,488,128 50,544,109

6. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONT’D)

Details of quoted investments as at 31 March 2016 are set out as follows:

Name of Counter Quantity

Aggregatecost

Fair valueas at

31/03/2016

Fair value as at

31/03/2016expressed

as percentage

of value of Fund

Units RM RM %

QUOTED EQUITY SECURITIES

Consumer Products

Carlsberg Brewery Malaysia Bhd 101,000 1,260,223 1,411,980 2.33

Cocoaland Holdings Bhd 1,160,000 2,650,173 2,668,000 4.40

Cypark Resources Bhd 1,000,000 1,812,100 1,900,000 3.13

Guinness Anchor Bhd 100,000 1,411,407 1,402,000 2.31

Hong Leong Industries Bhd 467,100 2,584,907 3,185,622 5.25

Magni-Tech Industries Bhd 677,950 1,496,471 2,915,185 4.80

Oriental Food Industries Holdings Bhd 867,000 1,879,117 1,985,430 3.27

Prolexus Bhd 540,000 892,376 1,026,000 1.694,913,050 13,986,774 16,494,217 27.18

50


51



Details of quoted investments as at 31 March 2016 are set out as follows: (cont’d)


Aggregatecost

Fair valueas at

31/03/2016

Fair value as at

31/03/2016expressed

as percentage

of value of Fund

Units RM RM %


Industrial Products

Jaya Tiasa Holdings Bhd 801,000 1,178,511 1,201,500 1.98

P.I.E Industrial Bhd 201,000 2,135,386 2,713,500 4.47

Sam Engineering & Equipment (M) Bhd 230,000 1,510,862 1,469,700 2.43

Sasbadi Holdings Bhd 1,800,000 1,875,072 2,448,000 4.03

SLP Resources Bhd 500,000 1,148,519 1,100,000 1.82

Success Transformer Corporation Bhd 700,000 1,670,650 1,610,000 2.65

4,232,000 9,519,000 10,542,700 17.38




Aggregatecost

Fair valueas at

31/03/2016

Fair value as at

31/03/2016expressed

as percentage

of value of Fund

Units RM RM %


Construction & Building Materials

Ikhmas Jaya Group Bhd 1,300,000 899,940 923,000 1.52

Kimlun Corporation Bhd 1,000,000 1,621,755 1,830,000 3.02

Mitrajaya Holdings Bhd 1,000,000 1,235,400 1,230,000 2.03

OKA Corporation Bhd 209,000 197,980 207,955 0.34

Protasco Bhd 700,000 1,060,640 1,078,000 1.784,209,000 5,015,715 5,268,955 8.69

52


53





Aggregatecost

Fair valueas at

31/03/2016

Fair value as at

31/03/2016expressed

as percentage

of value of Fund

Units RM RM %


Finance & Insurance

Aeon Credit Service (M) Bhd 162,000 2,048,277 2,067,120 3.41

Allianz Malaysia Bhd 50,000 527,697 536,000 0.88

Syarikat Takaful Malaysia Bhd 576,000 1,650,818 2,338,560 3.85

Tune Protect Group Bhd 1,200,000 1,476,900 1,620,000 2.67

1,988,000 5,703,692 6,561,680 10.81

PropertiesLBS Bina Group Bhd 420,000 614,323 667,800 1.10

Matrix Concepts Holdings Bhd 300,000 747,660 744,000 1.23

UEM Sunrise Bhd 1,500,000 1,684,050 1,710,000 2.82

2,220,000 3,046,033 3,121,800 5.15




Aggregatecost

Fair valueas at

31/03/2016

Fair value as at

31/03/2016expressed

as percentage

of value of Fund

Units RM RM %


TechnologyKey Asic Bhd 8,744,000 1,702,520 1,748,800 2.88Managepay Systems Bhd 5,000,000 1,237,400 1,175,000 1.94

13,744,000 2,939,920 2,923,800 4.82

Trading & Services

Malaysia Airports Holdings Bhd 250,000 1,545,175 1,700,000 2.80

Cycle & Carriage Bintang Bhd 400,000 1,470,940 1,372,000 2.26

Century Logistics Holdings Bhd 1,000,000 891,735 900,000 1.48

Genting Bhd 100,000 891,330 980,000 1.62Only World Group Holdings Bhd 731,240 1,741,930 1,754,976 2.89

Scicom (MSC) Bhd 1,200,000 2,640,940 2,868,000 4.73

3,681,240 9,182,050 9,574,976 15.78

54


55





Aggregatecost

Fair valueas at

31/03/2016

Fair value as at

31/03/2016expressed

as percentage

of value of Fund

Units RM RM %

TOTAL QUOTED INVESTMENTS34,987,290 49,393,184 54,488,128 89.81

NET UNREALISED GAIN ON CHANGE IN VALUE OF INVESTMENTS 5,094,944

FAIR VALUE OF TOTAL QUOTED INVESTMENTS 54,488,128


Details of quoted investments as at 31 March 2015 are set out as follows:


Aggregatecost

Fair valueas at

31/03/2015

Fair value as at

31/03/2015expressed

aspercentage

of value of Fund

Units RM RM %


Consumer Products

IQ Group Holdings Bhd 300,000 770,794 810,000 1.42

CCM Duopharma Biotech Bhd 300,000 947,164 1,164,000 2.04

Karex Bhd 500,000 1,695,422 2,295,000 4.03Latitude Tree Holdings Bhd 479,000 1,927,830 3,036,860 5.33

Magni-Tech Industries Bhd 480,000 1,478,943 1,526,400 2.68

Prolexus Bhd 1,480,000 1,952,351 2,738,000 4.81QL Resources Bhd 292,000 1,099,554 1,144,640 2.01

Sasbadi Holdings Bhd 678,000 1,140,567 1,247,520 2.19

4,509,000 11,012,625 13,962,420 24.51

56


57





Aggregatecost

Fair valueas at

31/03/2015

Fair value as at

31/03/2015expressed

aspercentage

of value of Fund

Units RM RM %


Industrial Products

United U-Li Corporation Bhd 643,000 1,502,803 1,658,940 2.91

Hartalega Holdings Bhd 210,000 1,442,079 1,820,700 3.20

Kossan Rubber Industries Bhd 310,000 1,323,571 1,757,700 3.09

SCGM Bhd 870,000 2,152,905 2,305,500 4.05Wellcall Holdings Bhd 1,000,000 1,550,060 2,000,000 3.51

3,033,000 7,971,418 9,542,840 16.76




Aggregatecost

Fair valueas at

31/03/2015

Fair value as at

31/03/2015expressed

aspercentage

of value of Fund

Units RM RM %


Construction & Building Materials

Eversendai Corporation Bhd 1,600,000 1,260,393 1,264,000 2.22

Ho Hup Construction Company Bhd 1,656,000 2,348,240 2,285,280 4.01

Mitrajaya Holdings Bhd 1,000,000 1,583,570 1,700,000 2.98

Tambun Indah Land Bhd 695,000 1,319,613 1,251,000 2.20

4,951,000 6,511,816 6,500,280 11.41

Finance & Insurance

Suria Capital Bhd 450,000 1,224,022 1,053,000 1.85

Syarikat Takaful Malaysia Bhd 145,000 1,739,641 1,879,200 3.30

595,000 2,963,663 2,932,200 5.15

58


59





Aggregatecost

Fair valueas at

31/03/2015

Fair value as at

31/03/2015expressed

aspercentage

of value of Fund

Units RM RM %


PropertiesEco World Development Group Bhd 1,000,000 1,617,489 1,860,000 3.26

Eco World Development Group Bhd - Warrant 400,000 - 122,000 0.21

SP Setia Bhd 328,000 1,134,880 1,134,880 1.99Sunway Bhd 318,000 1,090,040 1,160,700 2.04

2,046,000 3,842,409 4,277,580 7.50

TechnologyGlobetronics Technology Bhd 330,900 1,309,347 1,740,534 3.05

Inari Amertron Bhd 542,500 1,520,553 1,795,675 3.15

Inari Amertron Bhd - Warrant 62,500 - 91,250 0.16

Vitrox Corporation Bhd 485,000 1,297,023 1,590,800 2.79

1,420,900 4,126,923 5,218,259 9.15




Aggregatecost

Fair valueas at

31/03/2015

Fair value as at

31/03/2015expressed

aspercentage

of value of Fund

Units RM RM %


Trading & Services

Barakah Offshore Petroleum Bhd 500,000 467,000 437,500 0.77

Berjaya Auto Bhd 580,000 2,092,046 2,192,400 3.85

MBM Resources Bhd 347,000 991,815 1,141,630 2.00

OCK Group Bhd 800,000 731,200 712,000 1.25

Scicom (MSC) Bhd 1,300,000 2,535,000 2,587,000 4.54

Uzma Bhd 500,000 1,086,600 1,040,000 1.834,027,000 7,903,661 8,110,530 14.24

60


61





Aggregatecost

Fair valueas at

31/03/2015

Fair value as at

31/03/2015expressed

aspercentage

of value of Fund

Units RM RM %

TOTAL QUOTED INVESTMENTS20,581,900 44,332,515 50,544,109 88.72

NET UNREALISED GAIN ON CHANGE IN VALUE OF INVESTMENTS 6,211,594

FAIR VALUE OF TOTAL QUOTED INVESTMENTS 50,544,109

7. CASH AND CASH EQUIVALENTS

2016 2015RM RM

Cash at bank 15,200 1,870,441Deposits with licensed

financial institutions 5,122,969 3,246,2745,138,169 5,116,715

The weighted average interest rates and the remaining maturities of deposits with licensed financial institutions are shown in Note 2.

8. AMOUNT DUE FROM/(TO) STOCKBROKERS

The amount due from/(to) stockbrokers which relates to sale/(purchase) of investment securities and instruments are unsecured, interest-free and receivable/(payable) according to the settlement rules of the applicable stock exchange.

9. OTHER RECEIVABLES

2016 2015RM RM

Dividend receivable 135,970 86,190

10. OTHER PAYABLES AND ACCRUALS

2016 2015RM RM

Sundry accruals 13,000 13,000Audit and tax fees 9,450 14,700Custodian fees 3,000 -

25,450 27,700

11. NUMBER OF UNITS IN CIRCULATION

2016 2015Number Numberof units of units

At the beginning of the financial year 69,641,667 61,826,667

Creation of units arising from application 25,328,000 19,485,000

Cancellation of units (25,777,129) (11,670,000)At the end of the financial

year 69,192,538 69,641,667

The maximum number of units that can be issued for circulation is 400,000,000 units. As at 31 March 2016, the number not yet issued is 330,807,462 units (2015: 330,358,333 units).

62


63


12. TRANSACTIONS WITH BROKERS/DEALERS

Details of transactions with the top 10 brokers/dealers for the financial year ended 31 March 2016 are as follows:

Name of brokers/dealers

Value oftrades

Percentageof totaltrades

Brokeragefees

Percentageof total

brokerageRM % RM %

2016KAF-Seagroatt & Campbell Securities Sdn Bhd * 246,984,878 46.58 555,912 44.65

RHB Investment Bank Bhd 96,055,123 18.12 220,637 17.72

CIMB Investment Bank Bhd 95,579,068 18.03 238,948 19.19

Maybank Investment Bank Bhd 91,550,865 17.27 229,565 18.44

530,169,934 100.00 1,245,062 100.00

* A related company to the manager

12. TRANSACTIONS WITH BROKERS/DEALERS (CONT’D)

Details of transactions with the top 10 brokers/dealers for the financial year ended 31 March 2015 are as follows:

Name of brokers/dealers

Value oftrades

Percentageof totaltrades

BrokerageFees

Percentageof total

BrokerageRM % RM %

2015KAF-Seagroatt & Campbell Securities Sdn Bhd * 122,051,194 39.98 274,615 38.59

Maybank Investment Bank Bhd 53,274,190 17.45 133,186 18.72

RHB Investment Bank Bhd 47,990,344 15.73 107,996 15.18

CIMB Investment Bank Bhd 45,734,612 14.98 114,343 16.07

Affin Hwang Investment Bank Bhd 35,144,561 11.52 79,101 11.12

Kenanga Investment Bank Bhd 467,500 0.15 1,052 0.15

Hong Leong Investment Bank Bhd 437,500 0.14 985 0.14

UOB Kay Hian Securities (M) Sdn Bhd 77,500 0.03 155 0.02

Public Investment Bank Bhd 72,600 0.02 163 0.01

305,250,001 100.00 711,596 100.00

* A related company to the manager

The Manager is of the opinion that all the transactions with the related company have been entered into in the normal course of business and have been established on terms and conditions that have been agreed upon by the parties involved.

64


65


13. UNITS HELD BY MANAGER AND RELATED PARTIES

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

Related parties Relationship

KAF Investment Funds Berhad The Manager

KAF Seagroatt & Campbell Bhd Immediate holding company of the Manager

AKKA Sdn Bhd Penultimate holding company of the Manager

AKKA Holdings Sdn Bhd Ultimate holding company of the Manager

Significant related party transactions and balances that are not already disclosed in other notes to the financial statements are set out below :

2016 2015No. of Units RM

No. of Units RM

KAF Investment Funds Berhad 655,033 574,333 241,704 197,738

* Yong Yit Hin - - 2,785 2,278

The above units were transacted at the prevailing market price.

All related party units are held legally and transacted at the prevailing market price.

* Yong Yit Hin has retired from the company on 5 January 2016.

14. MANAGEMENT EXPENSE RATIO (MER)

2016 2015

MER 1.87% 1.68%

MER is derived from the following calculation:

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

A = Management feeB = Trustee’s feesC = Audit feeD = Tax agent’s feeE = Other expensesF = Average NAV of Fund calculated on daily basis

The average NAV of the Fund for the financial year calculated on daily basis was RM58,253,488 (2015: RM47,948,539).

15. PORTFOLIO TURNOVER RATIO (PTR)

2016 2015

PTR (times) 4.55 times 3.12 times

PTR is derived from the following calculation:

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

Average NAV of the Fundfor the financial year calculated on daily basis

where: total acquisition for the financial year= RM264,404,794 (2015: RM158,800,560)total disposal for the financial year= RM265,765,140 (2015: RM140,714,819)

66


67

16. SEGMENTAL REPORTING

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. The CEO is responsible for the performance of the Fund and considers the business to have a single operating segment.

The reportable operating segment derives its income by seeking investments to achieve targeted returns commensurate with an acceptable level of risk within the portfolio. These returns consist of dividend income, interest income earned from investments and gains on the appreciation in the value of investments and derive from Malaysia.

CORPORATE INFORMATION

ManagerKAF Investment Funds Berhad (334195-K)

Registered OfficeLevel 14, Chulan Tower

No. 3 Jalan Conlay50450 Kuala Lumpur

Business OfficeLevel 11, Chulan Tower

No. 3 Jalan Conlay50450 Kuala Lumpur

Tel: 03-2171 0559 Fax: 03-2171 0583Customer Service Hotline: 1-800-88-3065

Website: www.kaf.com.my

Board of DirectorsTan Sri Abu Talib Othman

Datuk Khatijah binti AhmadDato’ Zakri Afandi bin Ismail

Chan Hwang Hsiung

SecretarySiti Nurmazita binti Mustapha (LS 0009160)

TrusteeRHB Trustees Berhad

Auditor & Reporting AccountantPricewaterhouseCoopers

Tax AdviserPricewaterhouseCoopers Taxation Services Sdn Bhd

BankerStandard Chartered Bank Bhd

KAF VISION FUND

ANNUAL REPORT

31 MARCH 2016

For more information,call us at 1-800-88-3065,log on to www.kaf.com.my

KAF Investment Funds Berhad (334195-K)

Level 11, Chulan TowerNo. 3, Jalan Conlay, 50450 Kuala LumpurTel: 03-2171 0559 Fax: 03-2171 0583

KAF INVESTMENT FUNDS BERHAD (334195-K)

Date post:	31-Jan-2018
Category:	Documents
Upload:	vuthuy
View:	219 times
Download:	0 times

KAF VISION FUND ANNUAL REPORT 31 MARCH 2016 AR March 20… · KAF VISION FUND ANNUAL REPORT 31...

Documents