KENANGA GLOBAL DIVIDEND FUND · Kenanga Global Dividend Fund Annual Report 2 2. MANAGER’S REPORT 2.1 Explanation on whether the Fund has achieved its investment objective For the

ANNUAL REPORT

For the Financial Year Ended 30 April 2019

KENANGA GLOBAL DIVIDEND FUND

KENANGA GLOBAL DIVIDEND FUND

Contents Page

Corporate Directory ii

Directory of Manager’s Offi ces iii

Fund Information 1

Manager’s Report 2 - 4

Fund Performance 5 - 8

Trustee’s Report 9

Independent Auditors’ Report 10 - 12

Statement by the Manager 13

Financial Statements 14 - 39

ii Kenanga Global Dividend Fund Annual Report

CORPORATE DIRECTORY

Manager: Kenanga Investors Berhad (Company No. 353563-P)

Registered Offi ce Business Offi ceLevel 17, Kenanga Tower Level 14, Kenanga Tower237, Jalan Tun Razak 237, Jalan Tun Razak50400 Kuala Lumpur, Malaysia 50400 Kuala Lumpur, MalaysiaTel: 03-2172 2888 Tel: 03-2172 3000Fax: 03-2172 2999 Tel: 03-2172 3080 E-mail: [email protected] Website: www.KenangaInvestors.com.my

Board of Directors Investment CommitteeDatuk Syed Ahmad Alwee Alsree (Chairman) Syed Zafi len Syed Alwee (IndependentSyed Zafi len Syed Alwee (Independent Member) Director) Peter John Rayner (IndependentPeter John Rayner (Independent Member) Director) Imran Devindran bin Abdullah (IndependentImran Devindran bin Abdullah (Independent Member) Director) Ismitz Matthew De AlwisIsmitz Matthew De Alwis Norazian Binti Ahmad Tajuddin (Independent Norazian Binti Ahmad Tajuddin (Independent Member) Director)

Company Secretary: Norliza Abd Samad (MAICSA 7011089)

Level 17, Kenanga Tower, 237, Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia.

Trustee: CIMB Commerce Trustee Berhad (Company No. 313031-A)

Registered Offi ce Business Offi ce Level 13, Menara CIMB Level 21, Menara CIMBJalan Stesen Sentral 2 Jalan Stesen Sentral 2Kuala Lumpur Sentral Kuala Lumpur Sentral50490 Kuala Lumpur 50490 Kuala LumpurTel: 03-2261 8888 Tel: 03-2261 8888Fax: 03-2261 0099 Fax: 03-2261 9889Website: www.cimb.com

Auditor: Ernst & Young (AF: 0039)

Level 23A, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, 50490 Kuala Lumpur.Tel: 03-7495 8000 Fax: 03-2095 5332

Tax Adviser: Ernst & Young Tax Consultants Sdn Bhd (Company No. 179793-K)

Level 23A, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, 50490 Kuala Lumpur.Tel: 03-7495 8000 Fax: 03-2095 5332

Membership: Federation of Investment Managers Malaysia (FIMM)

19-06-1, 6th Floor, Wisma Tune, 19, Lorong Dungun, Damansara Heights, 50490 Kuala Lumpur, Malaysia. Tel: 03-2093 2600 Fax: 03-2093 2700 Website: www.fi mm.com.my

iiiKenanga Global Dividend Fund Annual Report

REGIONAL BRANCH OFFICES:

Kuala LumpurLevel 13, Kenanga Tower237, Jalan Tun Razak50400 Kuala Lumpur, MalaysiaTel : 03-2172 3123 Fax : 03-2172 3133

MelakaNo. 25-1, Jalan Kota Laksamana 2/17Taman Kota Laksamana, Seksyen 275200 MelakaTel : 06-281 8913 / 06-282 0518Fax : 06-281 4286

KlangNo. 12, Jalan Batai Laut 3Taman Intan, 41300 KlangSelangor Darul EhsanTel : 03-3341 8818 / 03-3348 7889 Fax : 03-3341 8816

Penang5.04, 5th Floor, Menara Boustead Penang No. 39, Jalan Sultan Ahmad Shah 10050 PenangTel : 04-210 6628Fax : 04-210 6644

Miri 2nd Floor, Lot 1264Centre Point Commercial CentreJalan Melayu98000 Miri, Sarawak Tel : 085-416 866 Fax : 085-322 340

Seremban 2nd Floor, No. 1D-2, Jalan Tuanku Munawir 70000 Seremban, Negeri Sembilan Tel : 06-761 5678 Fax : 06-761 2242

Johor BahruNo. 63Jalan Molek 3/1, Taman Molek81100 Johor Bahru, JohorTel : 07-288 1683Fax : 07-288 1693

Kuching1st Floor, No 71Lot 10900, Jalan Tun Jugah93350 Kuching, SarawakTel : 082-572 228 Fax : 082-572 229

KuantanGround Floor Shop,No. B8, Jalan Tun Ismail 1,25000 Kuantan, Pahang.Tel : 09-514 3688Fax : 09-514 3838

IpohSuite 1, 2nd Floor,No. 63, Persiaran Greenhill30450 Ipoh, Perak, MalaysiaTel : 05-254 7573 / 7570 / 7575Fax : 05-254 7606

Kota KinabaluLevel 8, Wisma Great EasternNo. 68, Jalan Gaya88000 Kota Kinabalu, SabahTel : 088-203 063 Fax : 088-203 062

Petaling Jaya44B, Jalan SS21/35Damansara Utama47400 Petaling Jaya, Selangor Tel : 03-7710 8828 Fax : 03-7710 8830

DIRECTORY OF MANAGER’S OFFICES

1 Kenanga Global Dividend Fund Annual Report

1. FUND INFORMATION

1.1 Fund Name

Kenanga Global Dividend Fund (KGDF or the Fund)

1.2 Fund Category / Type

Feeder / Growth

1.3 Investment Objective

The Fund aims to achieve capital growth by investing in a diversifi ed portfolio of high dividend-yielding equities globally through a target fund.

1.4 Investment Strategy

The Fund will invest a minimum of 95% of its Net Asset Value (NAV) in NN (L) Global High Dividend (NNGHD) domiciled in Luxembourg. The remaining will be invested in liquid assets including money market instruments and deposits with licensed fi nancial institutions which will enable the Manager to fulfi ll investors’ redemption requests.

1.5 Duration

The Fund was launched on 19 March 2007 and it shall exist as long as it appears to the Manager and the Trustee that it is in the interests of the unit holders for it to continue.

1.6 Performance Benchmark

MSCI World Index

1.7 Distribution Policy

Income distribution (if any) will be distributed annually on a best effort basis.

1.8 Breakdown of unit holdings of KGDF as at 30 April 2019

Size of holdings No. of unit holders No. of units held 5,000 and below 1 3,449 5,001 - 10,000 92 836,248 10,001 - 50,000 221 5,190,125 50,001 - 500,000 69 7,445,821 500,001 and above 8 11,493,513 Total 391 24,969,156

2Kenanga Global Dividend Fund Annual Report

2. MANAGER’S REPORT

2.1 Explanation on whether the Fund has achieved its investment objective

For the fi nancial year under review, the Fund fulfi lled its investment objective, having invested in a diversifi ed portfolio of global high dividend yielding equities through a target fund.

2.2 Comparison between the Fund’s performance and performance of the benchmark

Performance Chart Since Launch (19/03/2007 - 30/4/2019)Kenanga Global Dividend Fund vs MSCI World Index

Source: Novagni Analytics and Advisory

2.3 Investment strategies and policies employed during the fi nancial year under review

For the fi nancial period under review, the Fund invested 96.6% of its NAV in NNGHD which is a fund denominated in Euro and domiciled in Luxembourg in line with its investment strategy and policy. The remaining was invested in liquid assets including money market instruments and deposits with licensed fi nancial institutions.

2.4 The Fund’s asset allocation as at 30 April 2019 and comparison with the previous fi nancial year

Asset 30 Apr 2019 30 Apr 2018Collective investment scheme - foreign 96.6% 95.7%Short term deposits and cash 3.4% 4.3%

Reason for the differences in asset allocation

There was a slightly higher asset allocation towards the collective investment scheme by 0.9% from the previous fi nancial year under review.

-60

-40

-20

0

20

40

60

80

Mar

07

Jul 1

6Ja

n 17

Dec

07

Jun

08

Dec

08

Jun

09

Dec

09

Jun

10

Dec

10

Jun

11

Dec

11

Jun

12

Dec

12

Jun

13

Dec

13

Jun

14

Dec

14

Jun

15

Dec

15

Jun

16

Dec

16

Jun

17

Dec

17

Jun

18

Dec

18

Apr

19

% Cumulative Return, Launch to 30/04/2019

Kenanga Global Dividend : 26.33 MSCI World CR USD : 73.11


2.5 Fund performance analysis based on NAV per unit (adjusted for income distribution; if any) since last review year

Year under review Kenanga Global Dividend Fund 5.50% MSCI World Index 10.03% Source: Lipper

For the fi nancial year under review, the Fund registered a return of 5.50% underperforming its benchmark return of 10.03%. The underperformance was due to unfavourable asset allocation and stock selection of the target fund.

2.6 Review of the market

Market review

Trade tensions, Fed tightening and growth concerns hit investor sentiment in the latter part of 2018; however, global equities rallied strongly at start of 2019 to fi nish with a gain of 7% over the 12-month reporting period ending 30 April 2019. From a regional perspective, the US was the best performer (+13.4%); Europe underperformed (-2.4%); and Japan was the worst performing region (-6.9%). Emerging markets also suffered (-4.7%). In terms of sectors, Technology (+20.2%) and Utilities (+12.1%) performed well, while Financials (-1.9%) and Materials (-1.5%) lagged.

The US economy grew strongly, benefi ting from a one-off “sugar high” from the Trump tax cuts that took effect in 2018. Fundamentally, the growth was supported by a strong feedback loop between income and spending in both the household and corporate sectors. The Federal Reserve hiked rates in June, September and December, by 25 basis points each time.

In Europe the ECB signaled that it would taper its QE program towards zero in the fourth quarter. The central bank also introduced time-and state-dependent forward guidance on the timing of the fi rst rate hike. Political tensions rose during the period as populism gained ground in Italy and France, adding more uncertainty to the European market. Brexit also continued to weigh on sentiment.

The Bank of Japan kept its yield curve policy and asset purchase programs intact in 2018. After fi ve years infl ation remains stubbornly and structurally well below the bank’s 2% target.

Emerging markets experienced a correction but performed well at the beginning of 2019, mainly due to lower Fed expectations, a weaker US dollar and Chinese stimulus.

Market outlook

Valuations have risen a lot due to the combination of a market rally and downward earnings revisions but are not stretched, especially not outside the US. The P/E discount of Europe and Japan relative to the US ranges from 20% to 26%, the biggest discount since the Great Financial Crisis. Moreover, the equity risk premium remains very high. Chinese data have turned the corner, indicating that stimulus efforts are fi nally feeding through.


2.6 Review of the market (contd.)

Market outlook (contd.)

In particular, credit growth numbers were encouraging. Although the latest PMI data came in somewhat below expectations, they show stability. Historically, the Eurozone economy follows with a couple of months delay. In the US, the Q1 GDP print came in above 3%, dispelling fears that the US economy is slowing down. Key risks to the outlook for equities remain US-China trade negotiations and Brexit.

Source: NN Investment Partners

2.7 Distributions

For the fi nancial year under review, the Fund did not declare any income distribution.

2.8 Details of any unit split exercise

The Fund did not carry out any unit split exercise during the fi nancial year under review.

2.9 Signifi cant changes in the state of affair of the Fund during the fi nancial year

There were no signifi cant changes in the state of affair of the Fund during the fi nancial year and up until the date of the manager’s report, not otherwise disclosed in the fi nancial statements.

2.10 Circumstances that materially affect any interests of the members

During the fi nancial year under review, there were no circumstances that materially affected any interests of the members.

2.11 Rebates and soft commissions

It is the policy of the Manager to credit any rebates received into the account of the Fund. Any soft commissions received by investment manager on behalf of the Fund are in the form of research and advisory services that assist in the decision making process relating to the investment of the Fund which are of demonstrable benefi t to unit holders of the Fund. Any dealing with the broker or dealer is executed on terms which are the most favourable for the Fund. For the fi nancial year under review, the Manager has received soft commissions from the stockbrokers.

2.12 Cross trade

During the fi nancial year under review, no cross-trade transactions were undertaken by investment manager for the Fund.


3. FUND PERFORMANCE

3.1 Details of portfolio composition of the Fund for the last three fi nancial years as at 30 April are as follows:

a. Distribution among industry sectors and category of investments:

FY FY FY 2019 2018 2017 % % %

Collective investment scheme - foreign 96.6 95.7 94.6Short term deposits and cash 3.4 4.3 5.4 100.0 100.0 100.0

Note: The above mentioned percentages are based on total investment market value plus cash.

b. Distribution among markets

At 30 April 2019, the target fund NN (L) Global High Dividend has invested in the following markets:


0.18

0.66

0.80

0.85

1.06

1.18

1.32

3.14

3.70

4.02

6.43

7.15

7.51

12.56

49.44

Others

Luxembourg

Italy

Korea

Spain

Ireland

Singapore

Germany

Canada

Netherlands

Japan

United Kingdom

Switzerland

France

United States


3.1 Details of portfolio composition of the Fund for the last three fi nancial years as at 30 April are as follows: (contd.)

c. Distribution among industry sectors

At 30 April 2019, the target fund NN (L) Global High Dividend has invested in the following sectors:


19.45

15.38

12.74

10.50

9.53

9.51

8.25

4.46

4.35

3.96

1.87

Financials

Informa�on Technology

Health Care

Industrials

Consumer Discre�onary

Energy

Consumer Staples

Communica�on Services

Materials

U�li�es

Cash


3.2 Performance details of the Fund for the last three fi nancial years ended 30 April are as follows:

FY FY FY 2019 2018 2017

Net asset value (“NAV”) (RM Million) 14.81* 22.35* 11.39Units in circulation (Million) 24.97 39.75 20.36NAV per unit (RM) 0.5931* 0.5622* 0.5595Highest NAV per unit (RM) 0.6034 0.5778 0.5732Lowest NAV per unit (RM) 0.5116 0.5423 0.4453Total return (%) 5.50 0.48 21.39- Capital growth (%) 5.50 0.48 21.39- Income growth (%) - - -Gross distribution per unit (sen) - - -Net distribution per unit (sen) - - -Management expense ratio (“MER”) (%) 1 0.57 0.92 0.70Portfolio turnover ratio (“PTR”) (times) 2 0.38 0.44 0.70

Note: Total return is the actual return of the Fund for the respective fi nancial years, computed based on NAV per unit and net of all fees.

MER is computed based on the total fees and expenses incurred by the Fund divided by the average fund size calculated on a daily basis. PTR is computed based on the average of the total acquisitions and total disposals of investment securities of the Fund divided by the average fund size calculated on a daily basis.

Above NAV and NAV per unit are not shown as ex-distribution as there was no distribution declared by the Fund in the current fi nancial year under review.

1 MER is lower against previous fi nancial year mainly due to increase in average fund size during the fi nancial year under review.

2 PTR is lower due to less trading activities taking place during the fi nancial year under review.

* The NAV and NAV per unit are valued based on bid price fair valuation method.


3.3 Average total return of the Fund

1 Year 3 Years 5 Years 30 Apr 18 30 Apr 16 30 Apr 14 - 30 Apr 19 - 30 Apr 19 - 30 Apr 19

Kenanga Global Dividend Fund 5.50% 9.00% 7.67%

MSCI World Index 10.03% 11.44% 10.46%

Source: Lipper

3.4 Annual total return of the Fund

Year under review 1 Year 1 Year 1 Year 1 Year 30 Apr 18 30 Apr 17 30 Apr 16 30 Apr 15 30 Apr 14 - 30 Apr 19 - 30 Apr 18 - 30 Apr 17 - 30 Apr 16 - 30 Apr 15

Kenanga Global Dividend Fund 5.50% 0.48% 21.39% 0.48% 10.32%

MSCI World Index 10.03% 0.40% 24.92% 3.05% 14.92%

Source: Lipper

Investors are reminded that past performance is not necessarily indicative of future performance. Unit prices and investment returns may fl uctuate.


4 TRUSTEE’S REPORT TO THE UNIT HOLDERS OF KENANGA GLOBAL DIVIDEND FUND

We, CIMB Commerce Trustee Berhad being the trustee for Kenanga Global Dividend Fund (“the Fund”), are of the opinion that Kenanga Investors Berhad (“the Manager”), acting in the capacity as Manager of the Fund, has fulfi lled its duties in the following manner for the fi nancial year ended 30 April 2019.

a) The Fund has been managed in accordance with the limitations imposed on the

investment powers of the Manager under the Deed, the Securities Commission Malaysia’s Guidelines on Unit Trust Funds, the Capital Markets and Services Act 2007 (as amended from time to time) and other applicable laws;

b) Valuation and pricing for the Fund has been carried out in accordance with the Deed and relevant regulatory requirements; and

c) Creation and cancellation of units have been carried out in accordance with the Deed

and relevant regulatory requirements.

For and on behalf of CIMB Commerce Trustee Berhad Lee Kooi Yoke Chief Executive Offi cer

Kuala Lumpur, Malaysia

17 June 2019


5 INDEPENDENT AUDITORS’ REPORT TO THE UNIT HOLDERS OF KENANGA GLOBAL DIVIDEND FUND REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Opinion

We have audited the fi nancial statements of Kenanga Global Dividend Fund (“the Fund”), which comprise the statement of fi nancial position as at 30 April 2019, and the statement of comprehensive income, statement of changes in net asset value and statement of cash fl ows of the Fund for the fi nancial year then ended, and notes to the fi nancial statements, including a summary of signifi cant accounting policies and other explanatory information, as set out on pages 14 to 39.

In our opinion, the accompanying fi nancial statements give a true and fair view of the fi nancial position of the Fund as at 30 April 2019 and of its fi nancial performance and cash fl ows for the fi nancial year then ended in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards.

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 fi nancial statements section of our report. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit 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 fulfi lled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.

Information other than the fi nancial statements and auditors’ report thereon

The Manager of the Fund (“the Manager”) is responsible for the other information. The other information comprises the information included in the annual report of the Fund, but does not include the fi nancial statements of the Fund and our auditors’ report thereon.

Our opinion on the fi nancial 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 fi nancial 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 fi nancial 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.


5 INDEPENDENT AUDITORS’ REPORT TO THE UNIT HOLDERS OF KENANGA GLOBAL DIVIDEND FUND (CONTD.)

Responsibilities of the Manager and the Trustee for the fi nancial statements

The Manager is responsible for the preparation of fi nancial 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 determines is necessary to enable the preparation of fi nancial statements of the Fund that are free from material misstatement, whether due to fraud or error.

In preparing the fi nancial 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 intends to liquidate the Fund or to cease operations, or has no realistic alternative but to do so.

The Trustee is responsible for overseeing the Fund’s fi nancial reporting process. The Trustee is also responsible for ensuring that the Manager maintains proper accounting and other records as are necessary to enable true and fair presentation of these fi nancial statements.

Auditors’ responsibilities for the audit of the fi nancial statements

Our objectives are to obtain reasonable assurance about whether the fi nancial 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 infl uence the economic decisions of users taken on the basis of these fi nancial statements.

As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the fi nancial 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 suffi cient 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.

• 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.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Manager.


5 INDEPENDENT AUDITORS’ REPORT TO THE UNIT HOLDERS OF KENANGA GLOBAL DIVIDEND FUND (CONTD.)

Auditors’ responsibilities for the audit of the fi nancial statements (contd.) • 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 signifi cant 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 fi nancial 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.

• Evaluate the overall presentation, structure and content of the fi nancial statements of the Fund, including the disclosures, and whether the fi nancial statements of the Fund represent the underlying transactions and events in a manner that achieves fair presentation.

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

and timing of the audit and signifi cant audit fi ndings, including any signifi cant defi ciencies in internal control that we identify during our audit.

Other matters

This report is made solely to the unit holders of the Fund, as a body, in accordance with the Guidelines on Unit Trust Funds issued by the Securities Commission Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

Ernst & Young Ng Sue EanAF: 0039 No.03276/07/2020 JChartered Accountants Chartered Accountant


17 June 2019


6. STATEMENT BY THE MANAGER

I, Ismitz Matthew De Alwis, being a director of Kenanga Investors Berhad, do hereby state that, in the opinion of the Manager, the accompanying statement of fi nancial position as at 30 April 2019 and the related statement of comprehensive income, statement of changes in net asset value and statement of cash fl ows for the fi nancial year ended 30 April 2019 together with notes thereto, are 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 fi nancial position of Kenanga Global Dividend Fund as at 30 April 2019 and of its fi nancial performance and cash fl ows for the fi nancial year then ended and comply with the requirements of the Deed.

For and on behalf of the Manager KENANGA INVESTORS BERHAD

ISMITZ MATTHEW DE ALWIS Executive Director/Chief Executive Offi cer


17 June 2019


7. FINANCIAL STATEMENTS

7.1 STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 30 APRIL 2019

Note 2019 2018 RM RM

INVESTMENT INCOME

Interest income 30,090 88,761Net gain/(loss) from investments: - Financial assets at fair value through profi t or loss (“FVTPL”) 4 1,050,221 (72,018) 1,080,311 16,743

EXPENSES

Manager’s fee 5 76,439 90,165Trustee’s fee 6 16,659 11,900Auditors’ remuneration 9,000 9,500Tax agent’s fee 4,000 11,200Administration expenses 11,860 13,132 117,958 135,897

NET INCOME/(LOSS) BEFORE TAX 962,353 (119,154)

Income tax 7 - -

NET INCOME/(LOSS) AFTER TAX, REPRESENTING TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE FINANCIAL YEAR 962,353 (119,154)

Net income/(loss) after tax is made up as follows: Realised gain 809,537 144,511 Unrealised gain/(loss) 4 152,816 (263,665) 962,353 (119,154)

The accompanying notes form an integral part of the fi nancial statements.


Kenanga Global Dividend Fund Annual Report 15

7.2 STATEMENT OF FINANCIAL POSITION AS AT 30 APRIL 2019


ASSETS

INVESTMENTS

Financial assets at FVTPL 4 14,192,663 21,412,070Short term deposits 8 486,000 940,000 14,678,663 22,352,070

OTHER ASSETS

Amount due from target fund’s manager 2,341,488 -Other receivables 9 43 695Cash at bank 11,288 21,159 2,352,819 21,854

TOTAL ASSETS 17,031,482 22,373,924

LIABILITIES

Amount due to Manager 2,204,564 7,421Amount due to Trustee 986 1,448Other payables 10 16,700 18,032TOTAL LIABILITIES 2,222,250 26,901

EQUITY

Unit holders’ contribution 47,230,052 55,730,196Accumulated losses (32,420,820) (33,383,173)NET ASSET VALUE (“NAV”) ATTRIBUTABLE TO UNIT HOLDERS 11 14,809,232 22,347,023

TOTAL LIABILITIES AND EQUITY 17,031,482 22,373,924

NUMBER OF UNITS IN CIRCULATION 11 24,969,156 39,749,512

NET ASSET VALUE PER UNIT (RM) 0.5931 0.5622


Kenanga Global Dividend Fund Annual Report 16

7.3 STATEMENT OF CHANGES IN NET ASSET VALUE FOR THE FINANCIAL YEAR ENDED 30 APRIL 2019

Unit holders’ Accumulated Total Note contribution losses NAV RM RM RM

2019At beginning of the fi nancial year 55,730,196 (33,383,173) 22,347,023 Total comprehensive loss - 962,353 962,353 Creation of units 11(a) 6,696,536 - 6,696,536 Cancellation of units 11(a) (15,013,187) - (15,013,187)Distribution equalisation 11(a) (183,493) - (183,493)At end of the fi nancial year 47,230,052 (32,420,820) 14,809,232

2018At beginning of the fi nancial year 44,657,041 (33,264,019) 11,393,022 Total comprehensive loss - (119,154) (119,154)Creation of units 11(a) 15,755,150 - 15,755,150 Cancellation of units 11(a) (4,835,083) - (4,835,083)Distribution equalisation 11(a) 153,088 - 153,088 At end of the fi nancial year 55,730,196 (33,383,173) 22,347,023


7.4 STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 30 APRIL 2019

2019 2018 RM RM

CASH FLOWS FROM OPERATING AND INVESTING ACTIVITIES

Proceeds from sale of fi nancial assets at FVTPL 9,628,751 1,300,000 Interest from deposits received 30,131 88,727 Tax agent’s fee paid (6,000) (10,700)Auditors’ remuneration paid (9,000) (9,000)Payment for other fees and expenses (11,192) (18,444)Trustee’s fee paid (17,121) (11,159)Manager’s fee paid (79,499) (85,916)Purchase of fi nancial assets at FVTPL (3,700,000) (12,009,533)Net cash generated from/(used in) operating and investing activities 5,836,070 (10,756,025)

CASH FLOWS FROM FINANCING ACTIVITIES

Cash received from units created 6,745,474 15,973,260 Cash paid on units cancelled (13,045,415) (4,877,433)Net cash (used in)/generated from fi nancing activities (6,299,941) 11,095,827 NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (463,871) 339,802 CASH AND CASH EQUIVALENTS AT BEGINNING OF THE FINANCIAL YEAR 961,159 621,357 CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR 497,288 961,159

Cash and cash equivalents comprise: Cash at bank 11,288 21,159 Short term deposits 486,000 940,000 497,288 961,159



7.5 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 APRIL 2019

1. THE FUND, THE MANAGER AND THEIR PRINCIPAL ACTIVITIES

Kenanga Global Dividend Fund (“the Fund”) was constituted pursuant to the executed Deed dated 6 February 2007 (collectively, together with deeds supplemental thereto, referred to as (“the Deed”) between the Manager, Kenanga Funds Berhad, and CIMB Commerce Trustee Berhad (“the Trustee”). The Fund commenced operations on 19 March 2007 and will continue to be in operation until terminated by the Trustee as provided under Part 12 of the Deed.

Pursuant to the executed First Supplemental Deed dated 15 May 2013 between Kenanga Investors Berhad and CIMB Commerce Trustee Berhad, Kenanga Investors Berhad was appointed as the Manager of the Fund with effect from 8 June 2013.

Kenanga Investors Berhad is a wholly-owned subsidiary of Kenanga Investment Bank Berhad that is listed on the Main Market of Bursa Malaysia Securities Berhad. All of these companies are incorporated in Malaysia.

The principal place of business of the Manager is Level 14, Kenanga Tower, 237, Jalan Tun Razak, 50400 Kuala Lumpur.

The Fund aims to achieve capital growth by investing in a diversifi ed portfolio of high dividend-yielding equities globally through a target fund. To achieve the investment objective of the Fund, it will invests a minimum of 95% of its NAV in NN (L) Global High Dividend (“NNGHD”) that was managed by NN Investment Partners Luxembourg S.A. (“NNIPL”), the target fund’s manager prior to 28 March 2019. With effect from 28 March 2019, NN Investment Partners B.V. (“NNIP”) has replaced NNIPL as the replacement target fund’s manager. NNGHD is denominated in Euro (“EUR”) and domiciled in Luxembourg. The remaining funds will be invested in liquid assets including money market instruments and deposits with licensed fi nancial institutions. NNGHD invests in a diversifi ed portfolio of securities issued by companies established, listed or traded in various countries worldwide and offering an attractive dividend yield.

The fi nancial statements were authorised for issue by the Chief Executive Offi cer of the Manager on 17 June 2019.

2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

To the extent the Fund invests in NNGHD, which has investment in global equities, it is exposed to market risk (which includes interest rate risk, price risk and currency risk), credit risk and liquidity risk. Whilst these are the most important types of fi nancial risks inherent in each type of fi nancial instruments, the Manager and the Trustee would like to highlight that this list does not purport to constitute an exhaustive list of all the risks inherent in an investment in the Fund.

The Manager monitors the portfolio of NNGHD to ensure that the underlying fund is positioned to meet its investment objectives. The Manager may seek alternative collective investment schemes or any permissible instruments that are consistent with the objective of the Fund.


2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) a. Market risk

Market risk is the risk that the fair value or future cash fl ows of a fi nancial instrument will fl uctuate because of changes in market prices. Market risk includes interest rate risk, price risk and currency risk.

Market risk arises when the value of the investments fl uctuates in response to the activities of individual companies, general market or economic conditions. It stems from the fact that there are economy-wide perils, which threaten all businesses. Hence, investors are exposed to market uncertainties. Fluctuation in the investments’ prices caused by uncertainties in the economic, political and social environment will affect the NAV of the Fund.

The Manager manages the risk of unfavourable changes in prices by cautious review of the investments and continuous monitoring of their performance and risk profi les.

i. Interest rate risk

The Fund has minimal exposure to interest rate risk as placements with licensed fi nancial institutions are short term in nature and have fi xed interest rates. In addition, the Fund has indirect exposure to interest rate risk through NNGHD.

ii. Price risk

Price risk is the risk of unfavourable changes in the fair values of foreign collective investment scheme. The Fund invests in foreign collective investment scheme which are exposed to price fl uctuations. This may then affect the NAV of the Fund.

Price risk sensitivity

The Manager’s best estimate of the effect on the profi t for the fi nancial year due to a reasonably possible change in investments in foreign collective investment scheme, with all other variables held constant is indicated in the table below:

Effects on profi t for Changes in price the fi nancial year Increase/(Decrease) Gain/(Loss) Basis points RM

2019 Collective investment scheme - foreign 5/(5) 8,267/(8,267)

2018Collective investment scheme - foreign 5/(5) 10,706/(10,706)

In practice, the actual trading results may differ from the sensitivity analysis above and the difference could be material.


2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) a. Market risk (contd.)

ii. Price risk (contd.)

Price risk concentration

The following table sets out the Fund’s exposure and concentration to price risk based on its portfolio of fi nancial instruments as at the reporting date.

Fair value Percentage of NAV 2019 2018 2019 2018 RM RM % %

Collective investment scheme - foreign 14,192,663 21,412,070 95.8 95.8

iii. Currency risk

Currency risk is the risk that the fair value or future cash fl ows of a fi nancial instrument will fl uctuate because of changes in foreign exchange rates.

When the foreign currencies fl uctuate in an unfavourable movement against Ringgit, the investment face currency loss in addition to capital gain/(loss). This will lead to lower NAV of the Fund.

The Fund invests a minimum 95% in NNGHD, denominated in EUR and domiciled in Luxembourg. The Manager may consider managing the currency risk using currency hedging. However, this would be subject to the current market outlook on the currency exposure risk as well.

Currency risk sensitivity

The Fund did not have any fi nancial liabilities denominated in foreign currencies as at the reporting date. The following table indicates the currencies to which the Fund had signifi cant exposure at the reporting date on its fi nancial assets. The analysis calculates the effect of a reasonably possible movement of the currency rate against Ringgit Malaysia on profi t with all other variables held constant.

Changes in Effects on profi t for currency rate the fi nancial year Increase/(Decrease) Gain/(Loss) Basis points RM

2019 EUR/RM 5/(5) 8,267/(8,267)

2018EUR/RM 5/(5) 10,706/(10,706)

In practice, the actual trading results may differ from the sensitivity analysis above and the difference could be material.


2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) a. Market risk (contd.)

iii. Currency risk (contd.)

Currency risk concentration

The following table sets out the Fund’s exposure to foreign currency exchange rates on its fi nancial assets as at the reporting date.

Fair value Percentage of NAV 2019 2018 2019 2018 RM RM % %

EUR 16,534,151 21,412,070 111.7 95.8

b. Credit risk

Prior to investing in NNGHD, the Manager has performed an evaluation of the performance and track record of NNGHD, as well as the fund management team of NNGHD.

i. Credit risk exposure

As at the reporting date, the Fund’s maximum exposure to credit risk is represented by the carrying amount of each class of fi nancial asset recognised in the statement of fi nancial position.

ii. Financial assets that are either past due or impaired

As at the reporting date, there are no fi nancial assets that are either past due or impaired.

iii. Credit quality of fi nancial assets

The Fund invests in deposits with fi nancial institutions licensed under the Financial Services Act 2013 and Islamic Financial Services Act 2013. The following table analyses the licensed fi nancial institutions by rating category:

Short term deposits

Percentage of total short term deposits Percentage of NAV 2019 2018 2019 2018 % % % %

RatingP1 100.0 - 3.3 - WR - 100.0 - 4.2 100.0 100.0 3.3 4.2


2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) c. Liquidity risk

Liquidity risk is defi ned as the risk that the Fund will encounter diffi culty in meeting obligations associated with fi nancial liabilities that are to be settled by delivering cash or another fi nancial asset. Exposure to liquidity risk arises because of the possibility that the Fund could be required to pay its liabilities or cancel its units earlier than expected. The Fund is exposed to cancellation of its units on a regular basis. Units sold to unit holders by the Manager are cancellable at the unit holders’ option based on the Fund’s NAV per unit at the time of cancellation calculated in accordance with the Deed.

Unit trust funds with principal investment strategies that involve foreign securities, derivatives or securities with substantial market and/or credit risk tend to have the greatest exposure to liquidity risks. NNGHD’s investment manager manages the risk by adopting NNIP’s diversifi cation policy that stipulates single and group issuer limits to confi ne over-exposure to a single company or group of companies.

The following table analyses the maturity profi le of the Fund’s fi nancial assets and fi nancial liabilities in order to provide a complete view of the Fund’s contractual commitments and liquidity.

Up to 1 year Note 2019 2018 RM RM

AssetsFinancial assets at FVTPL 14,192,663 21,412,070 Short term deposits 486,000 940,000 Other assets 2,352,819 21,854 i. 17,031,482 22,373,924

LiabilitiesOther liabilities ii. 2,205,550 8,869

Equity iii. 14,809,232 22,347,023

Liquidity gap 16,700 18,032

i. Financial assets

Analysis of fi nancial asset at FVTPL into maturity groupings is based on the expected date on which this asset will be realised. The Fund’s investments in foreign collective investment scheme have been included in the “up to 1 year” category on the assumption that this is highly liquid investment which can be realised should all of the Fund’s unit holders’ equity be required to be redeemed. For other assets, the analysis into maturity groupings is based on the remaining period from the end of the reporting period to the contractual maturity date or if earlier, the expected date on which the assets will be realised.


2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) c. Liquidity risk (contd.)

ii. Financial liabilities

The maturity grouping is based on the remaining period from the end of the reporting period to the contractual maturity date or if earlier, the date on which liabilities will be settled. When the counterparty has a choice of when the amount is paid, the liability is allocated to the earliest period in which the Fund can be required to pay.

iii. Equity

As the unit holders can request for redemption of their units, they have been categorised as having a maturity of “up to 1 year”.

d. Regulatory reportings

It is the Manager’s responsibility to ensure full compliance of all requirements under the Guidelines on Unit Trust Funds issued by Securities Commission Malaysia. Any breach of any such requirement has been reported in the mandatory reporting to Securities Commission Malaysia on a monthly basis.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Basis of accounting

The fi nancial statements of the Fund have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRS”) as issued by the Malaysian Accounting Standards Board (“MASB”) and International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

The fi nancial statements have been prepared on the historical cost basis except as disclosed in the accounting policies below.

The accounting policies adopted are consistent with those of the previous fi nancial year except for the adoption of the new and amended MFRS and Interpretation Committee’s (“IC”) Interpretation which became effective for the Fund on 1 May 2018.

Effective for fi nancial period beginning onDescription or after

Amendments to MFRS contained in the document entitled “Annual Improvements to MFRS Standards 2014 - 2016 Cycle” 1 January 2018 Amendments to MFRS 1: First-time Adoption of Malaysian Financial Reporting Standards contained in the document entitled “Annual Improvements to MFRS Standards 2014 - 2016 Cycle” 1 January 2018 Amendments to MFRS 128: Investments in Associates and Joint Ventures contained in the document entitled “Annual Improvements to MFRS Standards 2014 - 2016 Cycle” 1 January 2018


3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

a. Basis of accounting (contd.)


MFRS 9: Financial Instruments 1 January 2018 MFRS 15: Revenue from Contracts with Customers 1 January 2018 Clarifi cations to MFRS 15: Revenue from Contracts with Customers 1 January 2018 Amendments to MFRS 2: Classifi cation and Measurement of Shared-Based Payment Transactions 1 January 2018

Temporary exemption from MFRS 9 subject to certain criteria being met for annual periods beginning

Amendments to MFRS 4: Applying MFRS 9 Financial on or after Instruments with MFRS 4 Insurance Contracts 1 January 2018 Amendments to MFRS 140: Transfers of Investment Property 1 January 2018 IC Interpretation 22: Foreign Currency Transactions and Advance Consideration 1 January 2018

The adoption of the new and amended MFRS and IC interpretation did not have any signifi cant impact on the fi nancial position or performance of the Fund other than the impacts as discussed below:

MFRS 9 Financial Instruments

MFRS 9 Financial Instruments replaces MFRS 139 Financial Instruments: Recognition and Measurement and all previous versions of MFRS 9 for annual periods on or after 1 January 2018. MFRS 9 requires fi nancial assets to be classifi ed on the basis of the business model within which they are held and their contractual cash fl ow characteristics. The requirements related to the fair value option for fi nancial liabilities were also changed to address own credit risk. The adoption of MFRS 9 has no effect on the classifi cation and measurement of the Fund’s fi nancial assets and fi nancial liabilities.

MFRS 9 also requires impairment assessments to be based on an expected credit loss model, replacing the MFRS 139 incurred loss model. Finally, MFRS 9 aligns hedge accounting more closely with risk management, establish a more principle-based approach to hedge accounting and address inconsistencies and weaknesses in the previous model.

The Fund did not change the classifi cation of its investments nor were there any material fi nancial impact arising from the adoption of this standard.



b. Standards, amendments and interpretations issued but not yet effective

As at the reporting date, the following Standards, Amendments and IC Interpretations that have been issued by MASB will be effective for the Fund in future fi nancial periods. The Fund intends to adopt the relevant standards and interpretations when they become effective.


Amendments to MFRS contained in the document entitled “Annual Improvements to MFRS Standards document 2015 - 2017 Cycle” 1 January 2019 Amendments to MFRS 3 and MFRS 11: Previously Held Interest in a Joint Operation contained in the document entitled “Annual Improvements to MFRS Standards 2015 - 2017 Cycle” 1 January 2019 Amendments to MFRS 112: Income Tax Consequences of Payments on Financial Instruments Classifi ed as Equity contained in the document entitled “Annual Improvements to MFRS Standards 2015 - 2017 Cycle” 1 January 2019 Amendments to MFRS 123: Borrowing Costs Eligible for Capitalisation contained in the document entitled “Annual Improvements to MFRS Standards 2015 - 2017 Cycle” 1 January 2019 MFRS 16: Leases 1 January 2019 Amendments to MFRS 9: Prepayment Features with Negative Compensation 1 January 2019 Amendments to MFRS 119: Plan Amendment, Curtailment or Settlement 1 January 2019 Amendments to MFRS 128: Long-term Interests in Associates and Joint Ventures 1 January 2019 IC Interpretation 23: Uncertainty over Income Tax Treatments 1 January 2019 Amendments to MFRS 2: Share-Based Payment 1 January 2020 Amendments to MFRS 3: Business Combinations 1 January 2020 Amendments to MFRS 3: Defi nition of a Business 1 January 2020 Amendments to MFRS 6: Exploration for and Evaluation of Mineral Resources 1 January 2020 Amendments to MFRS 14: Regulatory Deferral Accounts 1 January 2020 Amendments to MFRS 101: Presentation of Financial Statements 1 January 2020 Amendments to MFRS 108: Accounting Policies, Changes in Accounting Estimates and Errors 1 January 2020 Amendments to MFRS 101 & MFRS 108: Defi nition of Material 1 January 2020 Amendments to MFRS 134: Interim Financial Reporting 1 January 2020 Amendment to MFRS 137: Provisions, Contingent Liabilities and Contingent Assets 1 January 2020 Amendment to MFRS 138: Intangible Assets 1 January 2020 Amendments to IC Interpretation 12: Service Concession Arrangements 1 January 2020 Amendments to IC Interpretation 19: Extinguishing Financial Liabilities with Equity Instruments 1 January 2020



b. Standards, amendments and interpretations issued but not yet effective (contd.)


Amendment to IC Interpretation 20: Stripping Costs in the Production Phase of a Surface Mine 1 January 2020 Amendments to IC Interpretation 22: Foreign Currency Transactions and Advance Consideration 1 January 2020 Amendments to IC Interpretation 132: Intangible Assets - Web Site Costs 1 January 2020 MFRS 17: Insurance Contracts 1 January 2021

Amendments to MFRS 10 and MFRS 128: Sale or Contribution To be announced of Assets between an Investor and its Associate or Joint Venture by MASB

The Fund will adopt the above pronouncements when they become effective in the respective fi nancial periods. These pronouncements are not expected to have any signifi cant impact to the fi nancial statements of the Fund upon their initial application.

c. Financial instruments

Financial assets are recognised in the statement of fi nancial position when, and only when, the Fund becomes a party to the contractual provisions of the fi nancial instruments.

i. Measurement categories of fi nancial assets and liabilities

From 1 May 2018, the Fund classifi es all of its fi nancial assets based on the business model for managing the assets and the asset’s contractual terms, measured at either:

• Amortised cost;• Fair value through other comprehensive income; and• Fair value through profi t or loss.

The Fund may designate fi nancial instruments at FVTPL, if so doing eliminates or signifi cantly reduces measurement or recognition inconsistencies.

The Fund’s other fi nancial assets include cash and bank balances, short term deposits and other receivables. Prior to 1 May 2018, the Fund classifi ed its other fi nancial assets as receivables (amortised cost), as explained in Note 3(c)(iii).

Financial liabilities are classifi ed according to the substance of the contractual arrangements entered into and the defi nitions of a fi nancial liability. Financial liabilities are classifi ed as either fi nancial liabilities at FVTPL or other fi nancial liabilities.

The Fund’s other fi nancial liabilities include trade payables and other payables.



c. Financial instruments (contd.)

i. Measurement categories of fi nancial assets and liabilities (contd.)

Other fi nancial liabilities are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest rate. Gains or losses are recognised in profi t or loss when the liabilities are derecognised, and through the amortisation process.

ii. Initial recognition and subsequent measurement

The classifi cation of fi nancial assets at initial recognition depends on their contractual terms and the business model for managing the instruments, as described in Note 3(c)(iii). Financial assets are initially measured at their fair value, except in the case of fi nancial assets recorded at FVTPL, transaction costs are added to, or subtracted from, this amount. Trade receivables are measured at the transaction price. When the fair value of fi nancial instruments at initial recognition differs from the transaction price, the Fund accounts for the Day 1 profi t or loss, as described below.

After initial measurement, debt instruments are measured at amortised cost, using the effective interest rate (“EIR”) method, less allowance for impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fee or costs that are an integral part of the EIR. Expected credit losses (“ECLs”) are recognised in the statement of comprehensive income when the investments are impaired.

Financial assets at FVTPL are recorded in the statement of fi nancial position at fair value. Changes in fair value are recorded in profi t or loss.

iii. Due from banks, short term deposits, trade and other receivables at amortised cost

Prior to 1 May 2018, included in the fi nancial assets are cash and bank balances, short term deposits and other receivables including receivables which are those non–derivative fi nancial assets with fi xed or determinable payments that were not quoted in an active market.

From 1 May 2018, the Fund only measures the amount due from banks, short term deposits and other receivables at amortised cost if both of the following conditions are met:

• The fi nancial asset is held within a business model with the objective to hold fi nancial assets in order to collect contractual cash fl ows; and

• The contractual terms of the fi nancial asset give rise on specifi ed dates to cash fl ows that are solely payments of principal and interest (“SPPI”) on the principal amount outstanding.




iii. Due from banks, short term deposits, trade and other receivables at amortised cost (contd.)

The details of these conditions are outlined below.

Business model assessment

The Fund determines its business model at the level that best refl ects how it manages groups of fi nancial assets to achieve its business objective.

The Fund’s business model is not assessed on an instrument-by-instrument basis, but at a higher level of aggregated portfolios and is based on observable factors such as:

• How the performance of the business model and the fi nancial assets held within that business model are evaluated and reported to the entity’s key management personnel;

• The risks that affect the performance of the business model (and the fi nancial assets held within that business model) and, in particular, the way those risks are managed;

• How managers of the business are compensated (for example, whether the compensation is based on the fair value of the assets managed or on the contractual cash fl ows collected); and

• The expected frequency, value and timing of sales are also important aspects of the Fund’s assessment.

The business model assessment is based on reasonably expected scenarios without taking ‘worst case’ or ‘stress case’ scenarios into account. If cash fl ows after initial recognition are realised in a way that is different from the Fund’s original expectations, the Fund does not change the classifi cation of the remaining fi nancial assets held in that business model, but incorporates such information when assessing newly originated or newly purchased fi nancial assets going forward, unless it has been determined that there has been a change in the original business model.

The SPPI test

As a second step of its classifi cation process the Fund assesses the contractual terms of fi nancial assets to identify whether they meet the SPPI test.

‘Principal’ for the purpose of this test is defi ned as the fair value of the fi nancial asset at initial recognition and may change over the life of the fi nancial asset (for example, if there are repayments of principal or amortisation/accretion of the premium/discount).

The most signifi cant elements of interest within a lending arrangement are typically the consideration for the time value of money and credit risk. To make the SPPI assessment, the Fund applies judgement and considers relevant factors such as the currency in which the fi nancial asset is denominated, and the period for which the interest rate is set.




iii. Due from banks, short term deposits, trade and other receivables at amortised cost (contd.)

The SPPI test (contd.)

In contrast, contractual terms that introduce a more than de minimis exposure to risks or volatility in the contractual cash fl ows that are unrelated to a basic lending arrangement do not give rise to contractual cash fl ows that are solely payments of principal and interest on the amount outstanding. In such cases, the fi nancial asset is required to be measured at FVTPL.

iv. Financial investments

Financial assets in this category are those that are managed in a fair value business model, or that have been designated by management upon initial recognition, or are mandatorily required to be measured at fair value under MFRS 9. This category includes debt instruments whose cash fl ow characteristics fail the SPPI criterion or are not held within a business model whose objective is either to collect contractual cash fl ows, or to both collect contractual cash fl ows and sell.

d. Reclassifi cation of fi nancial assets and liabilities

The Fund has not reclassifi ed its fi nancial assets and fi nancial liabilities subsequent to their initial recognition and upon adoption of MFRS 9.

e. Derecognition of fi nancial assets

A fi nancial asset (or, where applicable, a part of a fi nancial asset or part of a group of similar fi nancial assets) is derecognised when the rights to receive cash fl ows from the fi nancial asset have expired. The Fund also derecognises the fi nancial asset if it has both transferred the fi nancial asset and the transfer qualifi es for derecognition.

The Fund has transferred the fi nancial asset if, and only if, either:

• The Fund has transferred its contractual rights to receive cash fl ows from the fi nancial asset; or

• It retains the rights to the cash fl ows, but has assumed an obligation to pay the received cash fl ows in full without material delay to a third party under a ‘pass-through’ arrangement.

Pass-through arrangements are transactions whereby the Fund retains the contractual rights to receive the cash fl ows of a fi nancial asset (the ‘original asset’), but assumes a contractual obligation to pay those cash fl ows to one or more entities (the ‘eventual recipients’), when all of the following three conditions are met:

• The Fund has no obligation to pay amounts to the eventual recipients unless it has collected equivalent amounts from the original asset, excluding short-term advances with the right to full recovery of the amount lent plus accrued interest at market rates;

• The Fund cannot sell or pledge the original asset other than as security to the eventual recipients; and



e. Derecognition of fi nancial assets (contd.)

• The Fund has to remit any cash fl ows it collects on behalf of the eventual recipients without material delay. In addition, the Fund is not entitled to reinvest such cash fl ows, except for investments in cash or cash equivalents including interest earned, during the period between the collection date and the date of required remittance to the eventual recipients.

A transfer only qualifi es for derecognition if either:

• The Fund has transferred substantially all the risks and rewards of the asset; or• The Fund has neither transferred nor retained substantially all the risks and rewards

of the asset, but has transferred control of the asset.

The Fund considers control to be transferred if and only if, the transferee has the practical ability to sell the asset in its entirety to an unrelated third party and is able to exercise that ability unilaterally and without imposing additional restrictions on the transfer.

When the Fund has neither transferred nor retained substantially all the risks and rewards and has retained control of the asset, the asset continues to be recognised only to the extent of the Fund’s continuing involvement, in which case, the Fund also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that refl ects the rights and obligations that the Fund has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration the Fund could be required to pay.

If continuing involvement takes the form of a written or purchased option (or both) on the transferred asset, the continuing involvement is measured at the value the Fund would be required to pay upon repurchase. In the case of a written put option on an asset that is measured at fair value, the extent of the entity’s continuing involvement is limited to the lower of the fair value of the transferred asset and the option exercise price.

f. Impairment of fi nancial assets (Policy applicable from 1 May 2018)

i. Overview of the expected credit loss (“ECL”) principles

As described in Note 3(a), the adoption of MFRS 9 has fundamentally changed the Fund’s receivables impairment method by replacing MFRS 139’s incurred loss approach with a forward-looking ECL approach.

ii. Write-offs

The Fund’s accounting policy under MFRS 9 remains the same as it was under MFRS 139. Financial assets are written off either partially or in their entirety only when the Fund has stopped pursuing the recovery. If the amount to be written off is greater than the accumulated loss allowance, the difference is fi rst treated as an addition to the allowance that is then applied against the gross carrying amount. Any subsequent recoveries are credited to credit loss expense.



g. Income

Income is recognised to the extent that it is probable that the economic benefi ts will fl ow to the Fund and the income can be reliably measured. Income is measured at the fair value of consideration received or receivable.

Interest income which includes the accretion of discount and amortisation of premium on fi xed income securities, is recognised using the effective interest method.

The realised gain or loss on sale of investments is measured as the difference between the net disposal proceeds and the carrying amount of the investment.

h. Cash and cash equivalents

For the purpose of the statement of cash fl ows, cash and cash equivalents include cash at bank and short term deposits with licensed fi nancial institutions with insignifi cant risk of changes in value.

i. Income tax

Income tax on the profi t or loss for the fi nancial year comprises current tax. Current tax is the expected amount of income taxes payable in respect of the taxable profi t for the fi nancial year.

As no temporary differences have been identifi ed, no deferred tax has been recognised.

j. Unrealised reserves

Unrealised reserves represent the net gain or loss arising from carrying investments at their fair values at reporting date. This reserve is not distributable.

k. Unit holders’ contribution - NAV attributable to unit holders

The unit holders’ contribution to the Fund is classifi ed as equity instruments. Distribution equalisation represents the average amount of undistributed net income

included in the creation or cancellation price of units. This amount is either refunded to unit holders by way of distribution and/or adjusted accordingly when units are released back to the Trustee.

l. Functional and presentation currency

i. Functional and presentation currency

The fi nancial statements of the Fund are measured using the currency of the primary economic environment in which the Fund operates (“the functional currency”). The fi nancial statements are presented in Ringgit Malaysia (“RM”), which is also the Fund’s functional currency.



l. Functional and presentation currency (contd.)

ii. Foreign currency transactions

In preparing the fi nancial statements of the Fund, transactions in currencies other than the Fund’s functional currency (foreign currencies) are recorded in the functional currency using exchange rates prevailing at the dates of the transactions. At each reporting date, monetary items denominated in foreign currencies are translated at the rates prevailing on the reporting date. All exchange gain or loss is recognised in profi t or loss.

Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are included in profi t or loss for the fi nancial year.

The principal exchange rate for each respective units of foreign currency ruling at reporting date is as follows:

2019 2018 RM RM

1 EUR 4.6345 4.7460

m. Distributions

Distributions are at the discretion of the Manager. A distribution to the Fund’s unit holders is accounted for as a deduction from retained earnings.

n. Signifi cant accounting judgments and estimates

The preparation of fi nancial statements requires the use of certain accounting estimates and exercise of judgment. Estimates and judgments are continually evaluated and are based on past experience, reasonable expectations of future events and other factors.

i. Critical judgments made in applying accounting policies

There are no major judgments made by the Manager in applying the Fund’s accounting policies.

ii. Key sources of estimation uncertainty

There are no key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a signifi cant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next fi nancial year.


4. FINANCIAL ASSETS AT FVTPL

2019 2018 RM RM

Financial assets held for trading, at FVTPL: Collective investment scheme - foreign 14,192,663 21,412,070

Net gain/(loss) on fi nancial assets at FVTPL comprised: Realised gain on disposals 897,405 191,647 Unrealised changes in fair values 152,816 (263,665) 1,050,221 (72,018)

Details of fi nancial assets at FVTPL as at 30 April 2019:

Percentage Quantity Cost Fair value of NAV RM RM %

Collective investment scheme - foreign NNGHD 6,501 12,581,939 14,192,663 95.8Total collective investment scheme - foreign, representing total fi nancial assets at FVTPL 12,581,939 14,192,663 95.8

Unrealised gain on fi nancial asset at FVTPL 1,610,724

5. MANAGER’S FEE

The Manager’s fee is calculated on a daily basis at a rate not less than 0.5% per annum and not exceeding 3.0% per annum of the NAV of the Fund as provided under Division 13.1 of the Deed.

The Manager is currently charging Manager’s fee of 1.80% per annum of the NAV of the Fund (2018: 1.80% per annum).

As the Fund invests in units of NNGHD, 1.50% of the Manager’s fee is charged by the NNGHD’s manager, NNIP, and the remaining 0.30% is charged by the Manager. Accordingly, there is no double charging of Manager’s fee.


6. TRUSTEE’S FEE

Pursuant to Second Supplemental Deed dated 25 July 2014, the Trustee’s fee is calculated at a rate not exceeding 0.08% per annual of the NAV of the Fund and subject to a minimum fee of RM9,000 per annum.

The Trustee’s fee is currently calculated at 0.08% per annum of the NAV of the Fund (2018: 0.08% per annum).

7. INCOME TAX

Income tax is calculated at the Malaysian statutory tax rate of 24% of the estimated assessable income for the current and previous fi nancial years.

Income tax is calculated on investment income less partial deduction for permitted expenses as provided for under Section 63B of the Income Tax Act, 1967.

A reconciliation of income tax expense applicable to net income/(loss) before tax at the statutory income tax rate to income tax expense at the effective income tax rate of the Fund is as follows:

2019 2018 RM RM

Net income/(loss) before tax 962,353 (119,154)

Tax at Malaysian statutory tax rate of 24% (2018: 24%) 230,965 (28,597)Tax effect of: Income not subject to tax (259,275) (67,298) Losses not deductible for tax purposes - 63,280 Expenses not deductible for tax purposes 5,521 7,362 Restriction on tax deductible expenses for unit trust fund 22,789 25,253 Income tax for the fi nancial year - -

8. SHORT TERM DEPOSITS

Short term deposits are held with licensed fi nancial institutions in Malaysia at the prevailing interest rates.


9. OTHER RECEIVABLES

2019 2018 RM RM

Other receivable - 611Interest receivable from short term deposits 43 84 43 695

10. OTHER PAYABLES

2019 2018 RM RM

Accrual for auditors’ remuneration 9,000 9,000 Accrual for tax agent’s fees 2,500 4,500 Provision for printing and other expenses 5,200 4,532 16,700 18,032

11. NET ASSET VALUE ATTRIBUTABLE TO UNIT HOLDERS

NAV attributed to unit holders is represented by:


Unit holders’ contribution (a) 47,230,052 55,730,196

Accumulated losses: Realised reserves (34,037,355) (34,846,892) Unrealised reserves 1,616,535 1,463,719 (32,420,820) (33,383,173)

14,809,232 22,347,023

(a) Unit holders’ contribution

2019 2018 No. of units RM No. of units RM

At beginning of the fi nancial year 39,749,512 55,730,196 20,364,373 44,657,041Add: Creation of units 11,888,442 6,696,536 28,023,881 15,755,150Less: Cancellation of units (26,668,798) (15,013,187) (8,638,742) (4,835,083)Distribution equalisation - (183,493) - 153,088At end of the fi nancial year 24,969,156 47,230,052 39,749,512 55,730,196

The number of units legally or benefi cially held by the Manager, Kenanga Investors Berhad, and parties related to the Manager as at 30 April 2019 were nil (2018: nil).


12. PORTFOLIO TURNOVER RATIO (“PTR”)

PTR for the fi nancial year is 0.38 times (2018: 0.44 times).

PTR is the ratio of average sum of acquisitions and disposals of investments of the Fund for the fi nancial year to the average NAV of the Fund, calculated on a daily basis.

13. MANAGEMENT EXPENSE RATIO (“MER”)

MER for the fi nancial year is 0.57% (2018: 0.92%).

MER is the ratio of total fees and recovered expenses of the Fund expressed as a percentage of the Fund’s average NAV, calculated on a daily basis.

14. TRANSACTIONS WITH TARGET FUND’S MANAGER

Transaction Percentage value of total RM %

NNIP* 15,662,893 100.0

* As the Fund is by nature a feeder fund to a global fund, NNGHD, hence substantial transactions were made with the target fund’s manager, NNIP.

The above transaction values are in respect of investments in foreign collective investment scheme. Transactions in these investments do not involve any commission or brokerage fees.

15. SEGMENTAL REPORTING

As stated in Note 1 to the fi nancial statements, the Fund is a feeder fund whereby at least 95% of the Funds’ NAV will be invested in NNGHD and maintaining a minimum of 2% of the Fund’s NAV in liquid assets. NNGHD is an open ended unit trust fund in Luxembourg and is managed by NNIP.

As the Fund is by nature a feeder fund to an underlying fund, disclosure by business or geographical segments is not relevant.


16. FINANCIAL INSTRUMENTS

a. Classifi cation of fi nancial instruments

The Fund’s fi nancial assets and fi nancial liabilities are measured on an ongoing basis at either fair value or at amortised cost based on their respective classifi cation. The signifi cant accounting policies in Note 3 describe how the classes of fi nancial instruments are measured, and how income and expenses, including fair value gains and losses, are recognised.

The following table analyses the fi nancial assets and fi nancial liabilities of the Fund in the statement of fi nancial position by the class of fi nancial instruments to which they are assigned and therefore by the measurement basis.

Financial Financial assets at Other assets amortised fi nancial at FVTPL cost liabilities Total RM RM RM RM

2019AssetsCollective investment scheme - foreign 14,192,663 - - 14,192,663 Short term deposits - 486,000 - 486,000 Amount due from target fund’s manager - 2,341,488 - 2,341,488 Other receivables - 43 - 43 Cash at bank - 11,288 - 11,288 14,192,663 2,838,819 - 17,031,482

Liabilities Amount due to Manager - - 2,204,564 2,204,564 Amount due to Trustee - - 986 986 - - 2,205,550 2,205,550

2018AssetsCollective investment scheme - foreign 21,412,070 - - 21,412,070 Short term deposits - 940,000 - 940,000 Other receivables - 695 - 695 Cash at bank - 21,159 - 21,159 21,412,070 961,854 - 22,373,924

Liabilities Amount due to Manager - - 7,421 7,421 Amount due to Trustee - - 1,448 1,448 - - 8,869 8,869


16. FINANCIAL INSTRUMENTS (CONTD.)

b. Financial instruments that are carried at fair value

The Fund’s fi nancial assets at FVTPL are carried at fair value. The fair values of these fi nancial assets were determined using prices in active markets.

The following table shows the fair value measurements by level of the fair value measurement hierarchy:

Level 1 Level 2 Level 3 Total RM RM RM RMInvestments:2019Collective investment scheme - foreign - 14,192,663 - 14,192,663 2018 Collective investment scheme - foreign - 21,412,070 - 21,412,070

Level 1: Listed prices in active marketLevel 2: Model with all signifi cant inputs which are observable market dataLevel 3: Model with inputs not based on observable market data

The fair value of foreign collective investment scheme is stated based on the NAV per unit of the NNGHD at the reporting date.

c. Financial instruments not carried at fair value and which their carrying amounts are reasonable approximations of fair value

The carrying amounts of the Fund’s other fi nancial assets and fi nancial liabilities are not carried at fair value but approximate fair values due to the relatively short term maturity of these fi nancial instruments.


17. CAPITAL MANAGEMENT

The capital of the Fund can vary depending on the demand for creation and cancellation of units to the Fund.

The Fund’s objectives for managing capital are:

a. To invest in investments meeting the description, risk exposure and expected return indicated in its prospectus;

b. To maintain suffi cient liquidity to meet the expenses of the Fund, and to meet cancellation requests as they arise; and

c. To maintain suffi cient fund size to make the operations of the Fund cost-effi cient.

No changes were made to the capital management objectives, policies or processes during the current and previous fi nancial years.


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Investor Services Center Head Offi ce, Kuala LumpurToll Free Line: 1 800 88 3737 Level 14, Kenanga Tower, 237, Jalan Tun RazakFax: +603 2172 3133 50400 Kuala Lumpur, MalaysiaEmail: [email protected] Tel: 03-2172 3000 Fax: 03-2172 3080

Documents

KENANGA GLOBAL DIVIDEND FUND · Kenanga Global Dividend Fund Annual Report 2 2. MANAGER’S REPORT 2.1 Explanation on whether the Fund has achieved its investment objective For the