AFFIN HWANG SELECT ASIA PACIFIC (EX JAPAN) REITS AND INFRASTRUCTURE FUND

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2 AFFIN HWANG SELECT ASIA PACIFIC (EX JAPAN) REITS AND INFRASTRUCTURE FUND Interim Report and Unaudited Financial Statements For the 6 Months Financial Period Ended 31 October 2018 Contents Page FUND INFORMATION... 2 FUND PERFORMANCE DATA... 3 MANAGER S REPORT... 5 TRUSTEE'S REPORT... 8 STATEMENT OF COMPREHENSIVE INCOME... 9 STATEMENT OF FINANCIAL POSITION STATEMENT OF CHANGES IN EQUITY STATEMENT OF CASH FLOWS SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NOTES TO THE FINANCIAL STATEMENTS STATEMENT BY THE MANAGER DIRECTORY OF SALES OFFICE

3 FUND INFORMATION Fund Name Affin Hwang Select Asia Pacific (ex Japan) REITs and Infrastructure Fund Fund Type Income & Growth Fund Category Investment Objective Benchmark Distribution Policy Mixed assets The Fund seeks to provide both income and capital appreciation over the medium to long-term by investing in equity or Equity-linked Securities of companies involved in infrastructure-related businesses, as well as real estate investment trusts (REITs), in the Asia Pacific (ex Japan) 75% MSCI All Country Asia ex Japan Infrastructure Index 25% Bloomberg Asia Real Estate Investment Trust Index Subject to the availability of income, the Fund will distribute income on an annual basis. However, the amount available for distribution may fluctuate from time to time BREAKDOWN OF UNITHOLDERS BY SIZE RM CLASS AS AT 31 OCTOBER 2018 Size of holdings (units) No. of unitholders No. of units held * ( 000) 5,000 and below ,001 to 10, ,001 to 50, ,993 50,001 to 500, , ,001 and above ,789 Total ,337 * Note: Excluding Manager s stock 2

4 FUND PERFORMANCE DATA Category As at 31 Oct 2018 (%) As at 31 Oct 2017 (%) As at 31 Oct 2016 (%) Portfolio composition Quoted equities local - Industrials REITs Trading / services Warrant Total quoted equities local Quoted equities foreign - Basic materials Consumer services Financials Healthcare Industrials Oil & gas REITs Rights Technology Telecommunications Utilities Total quoted equities foreign Cash & cash equivalent Total Total NAV (RM million) NAV per Unit (RM) Unit in Circulation (million) Highest NAV Lowest NAV Return of the Fund (%) iii Capital Growth (%) i Income Distribution (%) ii Nil Gross Distribution per Unit (sen) Nil Net Distribution per Unit (sen) Nil Management Expense Ratio (%) Portfolio Turnover Ratio (times) Basis of calculation and assumption made in calculating the returns:- The performance figures are a comparison of the growth/decline in NAV for the stipulated period taking into account all the distribution payable (if any) during the stipulated period. An illustration of the above would be as follow:- Capital return = NAV per Unit end / NAV per Unit begin 1 Income return = Income distribution per Unit / NAV per Unit ex-date Total return = (1+Capital return) x (1+Income return) 1 Capital Return i = (NAV per 31/10/18 NAV per 30/4/18* - 1) x 100 = ( ) x 100 = % 1 The MER of the Fund remained relatively unchanged, albeit marginally lower than previous period under review. 2 The Fund s PTR was higher than previous year given the lower average NAV for the financial period. 3

5 Total Income Return ii = Nil Return of the Fund iii = [{(1 + Capital Return) x (1 + Income Return)} 1] x 100 = [{(1 + (-11.52%)) x ( %)} 1] x 100 = % * Source HSBC Trustee Table 1: Performance of the Fund 6 Months (1/5/18-31/10/18) 1 Year (1/11/17-31/10/18) 3 Years (1/11/15-31/10/18) 5 Years (1/11/13-31/10/18) Since Commencement (16/5/07-31/10/18) Fund (11.52%) (15.60%) (3.97%) 23.89% 20.77% Benchmark (2.17%) (8.14%) (3.47%) 27.94% 25.86% Outperformance / (Underperformance) (9.35%) (7.46%) (0.50%) (4.05%) (5.09%) Source of Benchmark: Bloomberg Table 2: Average Total Return 1 Year (1/11/17-31/10/18) 3 Years (1/11/15-31/10/18) 5 Years (1/11/13-31/10/18) Since Commencement (16/5/07-31/10/18) Fund (15.60%) (1.34%) 4.37% 1.66% Benchmark (8.14%) (1.17%) 5.05% 2.03% Outperformance / (Underperformance) (7.46%) (0.17%) (0.68%) (0.37%) Source of Benchmark: Bloomberg Table 3: Annual Total Return FYE 2018 (01/5/17-30/4/18) FYE 2017 (01/5/16-30/4/17) FYE 2016 (01/5/15-30/4/16) FYE 2015 (01/5/14-30/4/15) FYE 2014 (01/5/13-30/4/14) Fund 0.95% 13.66% (0.29%) 17.01% 0.45% Benchmark (5.63%) 10.50% (1.49%) 25.69% (3.10%) Outperformance / (Underperformance) 6.58% 3.16% 1.20% (8.68%) 3.55% Source of Benchmark: Bloomberg Past performance is not necessarily indicative of future performance and that Unit prices and investment returns may go down, as well as up. 4

6 Percentage Growth (%) MANAGER S REPORT Performance Review For the period under review from 1 May 2018 to 31 October 2018, the Fund registered a % return compared to the benchmark return of -2.17%. The Fund thus underperformed the Benchmark by 9.35%. The Net Asset Value ( NAV ) per unit of the Fund as at 31 October 2018 was RM compared to its NAV per unit as at 30 April 2018 was RM Figure 1: Movement of the Fund versus the Benchmark Benchmark Affin Hwang Select Asia Pacific (ex Japan) REITs and Infrastructure Fund -50 May-07 Apr-09 Mar-11 Jan-13 Dec-14 Nov-16 Oct-18 This information is prepared by Affin Hwang Asset Management Berhad (AFFINHWANGAM) for information purposes only. Past earnings or the fund s distribution record is not a guarantee or reflection of the fund s future earnings/future distributions. Investors are advised that unit prices, distributions payable and investment returns may go down as well as up. Source of Benchmark is from Bloomberg. Benchmark: 75% MSCI All Country Asia ex Japan Infrastructure Index + 25% Bloomberg Asia Real Estate Investment Trust Index Income Distribution / Unit Split No income distributions or unit splits were declared for the financial period ended 31 October

7 Asset Allocation For a snapshot of the Fund s asset mix during the period under review, please refer to Figure 2. Figure 2: Asset allocation of the Fund 31 Oct Oct Oct 2016 (%) (%) (%) Quoted equities local Quoted equities foreign Cash & cash equivalent Total As at 31 October 2018, the asset allocation of the Fund stood at 52.86% in equities while the balance was held in cash and cash equivalent. During the period under review, the Manager had raised its cash level substantially to 47.14% from 4.55% a year ago on the back of volatile market environment. Equity exposure of the Fund was cut down by half over the same period. Within the domestic portfolio, the Manager had ceased exposures into sectors like industrials and trading/services. Similarly, foreign equity exposures had dropped to 48.25% from 89.32% a year ago. Strategies Employed With the return of volatility in markets, we are raising our cash holdings and will stay more defensive in our allocation with capital protection taking precedence. We ve rotated a portion of our allocation from Hong Kong and China to Singapore, which has become the portfolio s largest country exposure. Market Review Emerging markets are seeing a tantrum-like sell-off, where investors appetite for risk-assets have tapered off significantly on the back of fractious developments within Turkey and Argentina that have sent both their currencies into free fall. Investors are ploughing back money into the US on signs of quicker growth, rising interest rates and a stronger greenback that has undermined the attraction of riskier EM assets. A brutal rout in October tested investor s resolve as a violent surge in Treasury yields and expectations of higher rates led to a global selloff across emerging markets amidst a repricing of risk assets. It was one of the largest broad-based market pullback in the last 15 years caused by a spike in yields. Regionally, the MSCI Asia ex-japan Index was weighed down by external risk plunging 18.99% in the period under review. Risk of a contagion effect to the rest of EMs have investors treading cautiously even though economic linkages between the two countries and the rest of Asia isn t apparent. The market sell-off was exacerbated further by outflows from global EM funds who were de-risking portfolios. Global fund managers have posited similar characteristics from Turkey & Argentina to other economies that might share some of these symptoms such as a high current account deficit and reliance on foreign debt. Trade remained a key overhang of markets following a fresh round of tariffs, where the Trump administration announced 10.0% duties on USD200 billion worth of Chinese imports which took effect on 24 September Washington had previously toyed with imposing a 25.0% tariff rate that was subsequently postponed to next year. China swiftly retaliated by imposing tariffs of their own on USD60 billion worth of US goods ranging between %. The two global powerhouses have already slapped tariffs on USD50 billion worth of goods throughout its trade skirmish, before the new wave of tariffs in September. Tensions also escalated following allegations of the use of spy-chips by China including espionage, election meddling, and the arrest of a Chinese intelligence officer that compounded fears in markets resulting in a risk-off mode. These chips were allegedly inserted at factories operated by Supermicro s subcontractors in China and reportedly ended up in almost 30 US companies including tech giants like Apple and Amazon which purportedly sent data signals back to China. 6

8 Added to the mix are escalating frictions between US and Saudi Arabia over the alleged disappearance of journalist Jamal Khashoggi. Turkish investigators believe he was murdered and body removed from the building. Fed minutes from the recent August FOMC gathering showed US central bankers confident of strong economic growth where a 25bps rate hike in September has been widely priced-in by markets. If the Fed raises rates at its September policy meeting, that would lift the fed funds rate to a range of 2.00% -2.25%. However, the Fed cautioned against downside risks including escalating trade tensions that could dampen growth and curb investment spending. Fed officials sounded a dovish stance against the need to raise rates aggressively especially with no strong signal of inflation accelerating and signs of yield curve inversion. Treasury yields would likely be capped from rising further in the longer term, as we may see investors reallocate back to safe haven instruments should the US-China dispute worsen. Regionally, with more new fixed income issuances rolling in, there may be repricing opportunities which could push yield spreads wider. Technical support for recent supply of bonds haven t been too strong, in which we believe that most managers and investors are awaiting for valuations to correct further from here. Investment Outlook The recent market correction will likely presage a new era of higher volatility in markets. We expect volatility to pick-up in the year, as markets adjust to a reversal of a rate-cut cycle, with global central banks expected to gradually lift interest rates and embark on their balance-sheet unwinding. The gradual withdrawal of monetary stimulus would be a key focal point in markets, as markets adjust to tighter liquidity conditions. Markets will take cues at the upcoming FOMC meeting in December, where the Fed is expected to raise rates which will bring the federal funds rate to a new range of 2.25% %. A more dovish US Federal Reserve could put a halt to the USD s recent strength and provide some short-term support for EM markets and currencies. The fall in oil prices may benefit EMs, with Asia being a net energy importer, particularly for countries like India, Indonesia and Philippines which have seen their currencies turnaround and now strengthened. State of Affairs of the Fund There is neither any significant change to the state affairs of the Fund nor any circumstances that materially affect any interests of the unit holders during the period under review. Soft Commissions received from Brokers As per the requirements of the Securities Commission s Guidelines on Unit Trust Funds and Guidelines on Compliance Function for Fund Management Companies, soft commissions received from brokers/dealers may be retained by the management company only if the : (i) (ii) goods and services provided are of demonstrable benefit to Unit holders of the Fund; and goods and services are in the form of research and advisory services that assists in the decision making process. During the financial period under review, the management company had received on behalf of the Fund, soft commissions in the form of research materials, data and quotation services, investment-related publications, market data feed and industry benchmarking agencies which are of demonstrable benefit to Unitholders of the Fund. 7

9 TRUSTEE'S REPORT TO THE UNITHOLDERS OF AFFIN HWANG SELECT ASIA PACIFIC (EX-JAPAN) REITS AND INFRASTRUCTURE FUND We have acted as Trustee of Affin Hwang Select Asia Pacific (ex Japan) REITs and Infrastructure Fund ( the Fund ) for the financial period ended 31 October To the best of our knowledge, Affin Hwang Asset Management Berhad ( the Management Company ), has operated and managed the Fund in accordance with the following:- (a) (b) (c) limitations imposed on the investment powers of the Management Company 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; valuation/pricing is carried out in accordance with the Deeds and any regulatory requirements; and creation and cancellation of units are carried out in accordance with the Deeds and any regulatory requirements. For HSBC (Malaysia) Trustee Berhad Tan Bee Nie Head, Trustee Operations Kuala Lumpur 13 December

10 STATEMENT OF COMPREHENSIVE INCOME FOR THE 6 MONTHS FINANCIAL PERIOD ENDED 31 OCTOBER months 6 months financial financial period ended period ended Note RM RM INVESTMENT (LOSS)/INCOME Dividend income 1,748,257 2,788,570 Interest income 28,431 14,874 Net gain/(loss) foreign currency exchange 1,181,284 (377,067) Net (loss)/gain on forward foreign currency contracts at fair value though profit or loss (728,264) 1,853,861 Net (loss)/gain on financial assets at fair value through profit or loss 8 (12,071,157) 7,125,578 (9,841,449) 11,405,816 EXPENSES Management fee 4 (926,034) (1,373,979) Trustee fee 5 (36,660) (54,217) Auditors' remuneration (3,775) (3,277) Tax agent's fee (4,703) (1,964) Transaction cost (729,189) (1,181,709) Other expenses (66,063) (65,518) (1,766,424) (2,860,904) NET (LOSS)/PROFIT BEFORE TAXATION (11,607,873) 8,544,912 TAXATION 6 (74,886) (149,585) NET (LOSS)/PROFIT AFTER TAXATION AND TOTAL COMPREHENSIVE INCOME FOR THE FINANCIAL PERIOD (11,682,759) 8,395,327 Net (loss)/profit after taxation is made up of the following: Realised amount (7,822,349) 11,980,389 Unrealised amount (3,860,410) (3,585,062) (11,682,759) 8,395,327 The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 9

11 STATEMENT OF FINANCIAL POSITION AS AT 31 OCTOBER 2018 ASSETS Note RM RM Financial assets at fair value through profit or loss 8 46,770, ,768,132 Cash and cash equivalents 9 40,036,770 6,346,815 Dividend receivables 113, ,094 Amount due from Manager - creation of units 3, ,184 Amount due from brokers 1,887,543 2,891,173 TOTAL ASSETS 88,811, ,582,398 LIABILITIES Forward foreign currency contracts at fair value though profit or loss ,887 Amount due to Manager - management fee 139, ,584 - cancellation of units 73, ,816 Amount due to Trustee 5,434 8,578 Amount due to brokers - 2,394,369 Auditors remuneration 3,875 9,877 Tax agent s fee 116, ,571 Other payables and accruals 1,321 30,919 TOTAL LIABILITIES 340,570 3,241,601 NET ASSET VALUE OF THE FUND 88,470, ,340,797 EQUITY Unitholders capital 199,599, ,655,284 Accumulated losses (111,129,152) (88,314,487) NET ASSETS ATTRIBUTABLE TO UNITHOLDERS 88,470, ,340,797 NUMBER OF UNITS IN CIRCULATION ,339, ,326,000 NET ASSET VALUE PER UNIT (RM) The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 10

12 STATEMENT OF CHANGES IN EQUITY FOR THE 6 MONTHS FINANCIAL PERIOD ENDED 31 OCTOBER 2018 Unitholders Accumulated capital losses Total RM RM RM Balance as at 1 May ,793,413 (99,446,393) 114,347,020 Total comprehensive loss for the financial period - (11,682,759) (11,682,759) Movement in unitholders capital: Creation of units arising from applications 801, ,709 Cancellation of units (14,995,154) - (14,995,154) Balance as at 31 October ,599,968 (111,129,152) 88,470,816 Balance as at 1 May ,141,939 (95,169,494) 157,972,445 Total comprehensive income for the financial period - 8,395,327 8,395,327 Distribution (Note 7) - (1,540,320) (1,540,320) Movement in unitholders capital: Creation of units arising from applications 10,226,647-10,226,647 Creation of units arising from distribution 1,532,996-1,532,996 Cancellation of units (32,246,298) - (32,246,298) Balance as at 31 October ,655,284 (88,314,487) 144,340,797 The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 11

13 STATEMENT OF CASH FLOWS FOR THE 6 MONTHS FINANCIAL PERIOD ENDED 31 OCTOBER 2018 CASH FLOWS FROM OPERATING ACTIVITIES 6 months 6 months financial financial period ended period ended Note RM RM Proceeds from sale of investments 144,637, ,589,252 Purchase of investments (99,357,841) (150,245,848) Dividends received 1,621,878 2,553,106 Interest received 28,431 14,874 Management fee paid (954,589) (1,388,859) Trustee fee paid (37,671) (54,796) Payment for other fees and expenses (816,671) (1,426,960) Realised (loss)/gain on forward foreign currency contracts (1,295,323) 2,740,825 Net realised gain/(loss) on foreign exchange 157,484 (890,204) Net cash generated from operating activities 43,982,876 23,891,390 CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from creation of units 798,620 9,918,028 Payments for cancellation of units (15,102,888) (35,925,964) Payments for distribution - (7,324) Net cash used in financing activities (14,304,268) (26,015,260) NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 29,678,608 (2,123,870) EFFECTS OF FOREIGN CURRENCY EXCHANGE 1,315,160 (78,680) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE FINANCIAL PERIOD 9,043,002 8,549,365 CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL PERIOD 9 40,036,770 6,346,815 The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 12

14 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOR THE 6 MONTHS FINANCIAL PERIOD ENDED 31 OCTOBER 2018 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 under the historical cost convention except as disclosed in summary of significant accounting policies and comply with Malaysian Financial Reporting Standards ( MFRS ) and International Financial Reporting Standards ( IFRS ). The preparation of financial statements in conformity with MFRS requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reported financial period. It also requires the Manager to exercise their judgment in the process of applying the Fund s accounting policies. Although these estimates and judgment are based on the Manager s best knowledge of current events and actions, actual results may differ. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note N. (a) Standards, amendments to published standards and interpretations that are effective The Fund has applied the following amendments for the first time for the financial year beginning on 1 May 2017: Amendments to MFRS 107 Statement of Cash Flows Disclosure Initiative. The adoption of these amendments did not have any impact on the current year and is not likely to affect future years. (b) The new standards and amendments to the published standards that are applicable to the Fund but not yet effective and have not been early adopted are as follows: (i) Financial year beginning on/after 1 May 2018 MFRS 9 Financial Instruments (effective from 1 January 2018) will replace MFRS 139 Financial Instruments: Recognition and Measurement. MFRS 9 retains but simplifies the mixed measurement model in MFRS 139 and establishes three primary measurement categories for financial assets: amortised cost, fair value through profit or loss and fair value through other comprehensive income ("OCI"). The basis of classification depends on the entity's business model and the cash flow characteristics of the financial asset. Investments in equity instruments are always measured at fair value through profit or loss with an irrevocable option at inception to present changes in fair value in OCI (provided the instrument is not held for trading). A debt instrument is measured at amortised cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest. 13

15 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (CONTINUED) (b) The new standards and amendments to published standards that are applicable to the Fund but not yet effective and have not been early adopted are as follows: (continued) (i) Financial year beginning on/after 1 May 2018 (continued) 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. MFRS 9 introduces an expected credit loss model on impairment that replaces the incurred loss impairment model used in MFRS 139. The expected credit loss model is forward-looking and eliminates the need for a trigger event to have occurred before credit losses are recognised. The Fund has reviewed its financial assets and liabilities and does not expect any impact from the adoption of the new standard on 1 May There will be no impact on the Fund s accounting for financial assets as the Fund s investments currently measured at fair value through profit or loss will continue to be measured on the same basis under MFRS 9. There will be no impact on the Fund s accounting for financial liabilities as the new requirements only affect the accounting for financial liabilities that are designated at fair value through profit or loss and the Fund does not have any such liabilities. The new impairment model requires the recognition of impairment provisions based on expected credit losses ( ECL ) rather than only incurred credit losses as is the case under MFRS 139. It applies to financial assets classified at amortised cost. Based on the assessments undertaken to date, the Fund does not expect any loss allowance to be recognised upon adoption of MFRS 9. 14

16 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES B INCOME RECOGNITION Dividend income is recognised on the ex-dividend date, when the right to receive the dividend has been established. Interest income from short-term deposits with a licensed financial institution is recognised on an effective interest rate method on an accrual basis. For quoted investments, realised gains and losses on sale of investments are accounted for as the difference between the net disposal proceeds and the carrying amount of investments, determined on a weighted average cost basis. C DISTRIBUTION A distribution to the Fund s unitholders is accounted for as a deduction from realised reserve. A proposed distribution is recognised as a liability in the period in which it is approved by the Trustee of the Fund. D TRANSACTION COSTS Transaction costs are costs incurred to acquire financial assets or liabilities at fair value through profit or loss. They include the bid-ask spread, 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. E TAXATION Current tax expense is determined according to the Malaysian tax laws at the current rate based upon the taxable profits earned during the financial period. Tax on investment income from foreign quoted investments is based on the tax regime of the respective countries that the Fund invests in. F 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. 15

17 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES G FOREIGN CURRENCY TRANSLATION Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in statement of comprehensive income, except when deferred in other comprehensive income as qualifying cash flow hedges. H FINANCIAL ASSETS AND FINANCIAL LIABILITIES (i) Classification The Fund designates its investment in quoted investments as financial assets at fair value through profit or loss at inception. Financial assets are designated at fair value through profit or loss when they are managed and their performance evaluated on a fair value basis. Derivatives are financial assets/liabilities at fair value through profit or loss categorised as held for trading unless they are designated hedges (Note M). Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and have been included in current assets. The Fund s loans and receivables comprise cash and cash equivalents, dividend receivables, amount due from Manager and amount due from brokers. Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability. The Fund classifies amount due to Manager, amount due to Trustee, auditors remuneration, tax agent s fee, and other payables and accruals as other financial liabilities. 16

18 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES H FINANCIAL ASSETS AND FINANCIAL LIABILITIES (CONTINUED) (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 statement of comprehensive income. Financial liabilities, within the scope of MFRS 139, are recognised in the statement of financial position when, and only when, the Fund becomes a party to the contractual provisions of the financial instrument Financial assets are 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. Gains or losses arising from changes in the fair value of the financial assets at fair value through profit or loss category including the effects of foreign currency transactions are presented in the statement of comprehensive income within net gain/(loss) on financial assets at fair value through profit or loss in the period 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. If a valuation based on the market price does not represent the fair value of the securities, for example during abnormal market conditions or when no market price is available, including in the event of a suspension in the quotation of the securities for a period exceeding 14 days, or such shorter period as agreed by the Trustee, then the securities are valued as determined in good faith by the Manager, based on the methods or basis approved by the Trustee after appropriate technical consultation. Derivative investment consists of currency forward contract. Financial derivative position will be marked to market at the close of each valuation day. Foreign exchange gains and losses on the derivative financial instrument are recognised in profit or loss when settled or at the date of the statement of financial position at which time they are included in the measurement of the derivative financial instrument. Deposit with licensed financial institutions are stated at cost plus accrued interest calculated on the effective interest method over the period from the date of placement to the date of maturity of the deposit. Loans and receivables and other financial liabilities are subsequently carried at amortised cost using the effective interest method. 17

19 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES H FINANCIAL ASSETS AND FINANCIAL LIABILITIES (CONTINUED) (iii) Impairment 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. If, in a subsequent year, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor s credit rating), the reversal of the previously recognised impairment loss is recognised in statement of comprehensive income. When an asset is uncollectible, it is written off against the related allowance account. Such assets are written off after all the necessary procedures have been completed and the amount of the loss has been determined. I CASH AND CASH EQUIVALENTS For the purpose of statement of cash flows, 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. 18

20 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES J AMOUNT DUE FROM/(TO) BROKERS Amounts due from and to brokers represent receivables for securities sold and payables for securities purchased that have been contracted for but not yet settled or delivered on the statement of financial position date respectively. These amounts are recognised initially at fair value and subsequently measured at amortised cost using the effective profit 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, profit income is recognised using the rate of profit 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 loans 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. K UNIT HOLDERS CAPITAL The unit holders contributions to the Fund meet the criteria to be classified as equity instruments under MFRS 132 Financial Instruments: Presentation. Those criteria include: the units entitle the holder to a proportionate share of the Fund s net assets value; the units are the most subordinated class and class features are identical; there is no contractual obligations to deliver cash or another financial asset other than the obligation on the Fund to repurchase; and the total expected cash flows from the units over its life are based substantially on the profit or loss of the Fund. The outstanding units are carried at the redemption amount that is payable at each financial year if unit holder exercises the right to put the unit back to the Fund. Units are created and cancelled at prices based on the Fund s net asset value per unit at the time of creation or cancellation. The Fund s net asset value per unit is calculated by dividing the net assets attributable to unit holders with the total number of outstanding units. 19

21 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES L SEGMENT REPORTING Operating segments are reported in a manner consistent with the internal reporting used by the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the strategic asset allocation committee of the Manager that makes strategic decisions. M DERIVATIVE FINANCIAL INSTRUMENTS A derivative financial instrument is any contract that gives rise to both a financial asset of one enterprise and a financial liability or equity instrument of another enterprise. A financial asset is any asset that is cash, a contractual right to receive cash or another financial asset from another enterprise, a contractual right to exchange financial instruments with another enterprise under conditions that are potentially favourable, or an equity instrument of another enterprise. A financial liability is any liability that is a contractual obligation to deliver cash or another financial asset to another enterprise, or to exchange financial instruments with another enterprise under conditions that are potentially unfavourable. The Fund s derivative financial instruments comprise forward currency contracts and interest rate swap. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The fair value of forward foreign exchange contracts is determined using forward exchange rates at the date of statements of financial position with the resulting value discounted back to present value. The fair value of interest rate swap is calculated as the present value of the estimated future cash flows based on observable yield curves. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and the nature of the item being hedged. Derivatives that do not qualify for hedge accounting are classified as held for trading and accounted for in accordance with the accounting policy set out in Note H. 20

22 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES N CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS IN APPLYING ACCOUNTING POLICIES The Fund makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. To enhance the information contents on the estimates, certain key variables that are anticipated to have material impacts to the Fund s results and financial position are tested for sensitivity to changes in the underlying parameters. Estimates and 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. In undertaking any of the Fund s investment, the Manager will ensure that all assets of the Fund under management will be valued appropriately, that is at fair value and in compliance with the SC Guidelines on Unit Trust Funds. 21

23 NOTES TO THE FINANCIAL STATEMENTS FOR THE 6 MONTHS FINANCIAL PERIOD ENDED 31 OCTOBER INFORMATION ON THE FUND The Unit Trust Fund was constituted under the name HwangDBS Global Infrastructure Fund (the Fund ) pursuant to the execution of a Deed dated 15 March 2007, First Supplemental Deed dated 18 June 2007, Second Supplemental Deed dated 15 October 2008, Seventh Supplemental Deed dated 28 April 2017 and Eighth Supplemental Deed dated 19 September The Fund has changed its name from HwangDBS Global Infrastructure Fund to Hwang Global Infrastructure Fund as amended by Third Supplemental Deed dated 18 January 2012, from Hwang Global Infrastructure Fund to Hwang Asia Pacific (Ex-Japan) Infrastructure Fund as amended by Fourth Supplemental Deed dated 2 May 2012 and from Hwang Asia Pacific (Ex-Japan) Infrastructure Fund to Hwang Asia Pacific (Ex-Japan) REITS and Infrastructure Fund as amended by Fifth Supplemental Deed dated 8 May 2013 and from Hwang Asia Pacific (Ex-Japan) REITS and Infrastructure Fund to Affin Hwang Select Asia Pacific (Ex-Japan) REITS and Infrastructure Fund as amended by the Sixth Supplemental Deed dated 27 June 2014 (the Deeds) entered into between Affin Hwang Asset Management Berhad (the Manager ) and HSBC (Malaysia) Trustees Berhad (the Trustee ). The Fund was commenced operations on 16 May 2007, and will continue its operation until terminated by the Manager or Trustee as provided under Clause 12.1 of the Deed. The Fund may invest in any of the following investments: a) Securities of companies listed on Bursa Malaysia and other exchanges of countries who are member of International Organization of Securities Commissions; b) Unlisted securities including, without limitation, securities that have been approved by the relevant regulatory authorities for the listing of and quotation for such securities; c) Debentures; d) Money market instruments; e) Deposits; f) Derivatives, for the purpose of hedging only; g) Warrants; h) Structured products; i) Units or shares in collective investment schemes; j) Any other form of investments as may be permitted by the Securities Commission from time to time are in line with the objective of the fund All investments will be subjected to the SC s Guidelines on Unit Trust Funds, the Deeds and the objective of the Fund. The main objective of the Fund is to provide both income and capital appreciation over the medium to longterm by investing in equity and equity-linked securities of companies involved in infrastructure-related businesses, as well as real estate investment trusts (REITs), in the Asia Pacific (ex Japan). The Manager is a company incorporated in Malaysia. The principal activities of the Manager are establishment and management of unit trust funds and private retirement schemes as well as providing fund management services to private clients. The financial statements were authorised for issue by the Manager on 13 December

24 NOTES TO THE FINANCIAL STATEMENTS 2 FINANCIAL INSTRUMENTS, RISK MANAGEMENT OBJECTIVE AND POLICIES Financial instruments are as follows: Financial assets/ (liabilities) at fair Loans and value through Note receivables profit or loss Total 2018 RM RM RM Quoted investments 8-46,770,003 46,770,003 Cash and cash equivalents 9 40,036,770-40,036,770 Dividend receivables 113, ,981 Amount due from Manager - creation of units 3,089-3,089 Amount due from brokers 1,887,543-1,887,543 Total 42,041,383 46,770,003 88,811, Quoted investments 8-137,768, ,768,132 Cash and cash equivalents 9 6,346,815-6,346,815 Dividend receivables 233, ,094 Amount due from Manager - creation of units 343, ,184 Amount due from brokers 2,891,173-2,891,173 Forward foreign currency contracts 10 - (167,887) (167,887) Total 9,814, ,600, ,414,511 All current liabilities are financial liabilities which are carried at amortised cost. The Fund is exposed to a variety of risks which include market risk (including price risk, interest rate risk, currency risk), liquidity risk, credit risk and capital risk. Financial risk management is carried out through internal control processes adopted by the Manager and adherence to the investment restrictions as stipulated by the SC s Guidelines on Unit Trust Funds. 23

25 NOTES TO THE FINANCIAL STATEMENTS 2 FINANCIAL INSTRUMENTS, RISK MANAGEMENT OBJECTIVE AND POLICIES (CONTINUED) Market risk (a) Price risk Price risk arises mainly from the uncertainty about future prices of investments. It represents the potential loss the Fund might suffer through holding market positions in the face of price movements. The Manager manages the risk of unfavourable changes in prices by continuous monitoring of the performance and risk profile of the investment portfolio. The Fund s overall exposure to price risk was as follows: RM RM Quoted Investments Quoted equities designated at fair value through profit or loss 46,770, ,768,132 The following table summarises the sensitivity of the Fund s (loss)/profit after taxation and net asset value to price risk movements. The analysis is based on the assumptions that the market price increased by 5% and decreased by 5% with all other variables held constant. This represents management s best estimate of a reasonable possible shift in the quoted securities, having regard to the historical volatility of the prices. Impact on (loss)/profit after % change in price Market value tax/nav RM RM RM % 44,431,503 (2,338,500) 0% 46,770, % 49,108,503 2,338, % 130,879,725 (6,888,407) 0% 137,768, % 144,656,539 6,888,407 24

26 NOTES TO THE FINANCIAL STATEMENTS 2 FINANCIAL INSTRUMENTS, RISK MANAGEMENT OBJECTIVE AND POLICIES (CONTINUED) Market risk (continued) (b) Interest rate risk Interest rate risk arises from the effects of fluctuations in the prevailing levels of market interest rates on the fair value of financial assets and liabilities and future cash flows. The Fund s exposure to the interest rate risk is mainly confined to short term placement with a financial institution. The Manager overcomes this exposure by way of maintaining deposits on short term basis. The Fund s exposure to interest rate risk associated with deposit with licensed financial institutions is not material as the deposits are held on a short term basis. (c) Currency risk Currency risk is associated with investments denominated in foreign currencies. When the foreign currencies fluctuate in an unfavourable movement against Ringgit Malaysia, the investments will face currency losses in addition to the capital gain/loss. The Manager will evaluate the likely directions of a foreign currency versus Ringgit Malaysia based on considerations of economic fundamentals such as interest rate differentials, balance of payments position, debt levels, and technical chart considerations. The following table sets out the foreign currency risk concentrations and counterparties of the Fund: Forward foreign Cash Other Quoted currency and cash assets*/ equities contracts equivalents (liabilities)** Total 2018 RM RM RM RM RM Australian Dollar 876,539-5, ,047 Hong Kong Dollar 12,496,409-18,225,773 52,490 30,774,672 Indonesian Rupiah 968, ,689 Singapore Dollar 28,345,462-2,195,584 1,949,034 32,490,080 United States Dollar ,557,514 (107,179) 19,450,335 42,687,099-39,984,379 1,894,345 84,565,823 25

27 NOTES TO THE FINANCIAL STATEMENTS 2 FINANCIAL INSTRUMENTS, RISK MANAGEMENT OBJECTIVE AND POLICIES (CONTINUED) Market risk (continued) (c) Currency risk (continued) The following table sets out the foreign currency risk concentrations and counterparties of the Fund (continued): Cash Quoted and cash Other Other equities equivalents assets* payables** Total 2017 RM RM RM RM RM Australian Dollar Hong Kong Dollar 57,591,311-1,420,378 52,801 59,064,490 Indonesian Rupiah 16,663, ,663,230 Philippine Peso 6,607, ,607,879 Singapore Dollar 32,110,318-2,915,154 (1,384,881) 33,640,591 Indian Rupee 7,359, ,061,978 9,421,551 United States Dollar 8,592,506 (167,887) 608,435 (108,396) 8,924, ,924,817 (167,887) 4,943, , ,322,419 *Other assets consist of dividend receivable and amount due from brokers **Other payables consist of amount due to brokers and tax agent s fee. 26

28 NOTES TO THE FINANCIAL STATEMENTS 2 FINANCIAL INSTRUMENTS, RISK MANAGEMENT OBJECTIVE AND POLICIES (CONTINUED) Market risk (continued) (c) Currency risk (continued) The table below summarises the sensitivity of the Fund's (loss)/profit after tax and net asset value to changes in foreign exchange movements. The analysis is based on the assumption that the foreign exchange rate changes by 5%, with all other variables remain constants. This represents management's best estimate of a reasonable possible shift in the foreign exchange rate, having regard to historical volatility of this rate. Any increase/decrease in foreign exchange rate will result in a corresponding decrease/increase in the net assets attributable to unitholders by approximately 5%. Disclosures below are shown in absolute terms, changes and impacts could be positive or negative. Impact on (loss)/profit Change in after tax/ price NAV 2018 % RM Australian Dollar +/- 5 +/- 44,102 Hong Kong Dollar +/- 5 +/- 1,538,734 Indonesian Rupiah +/- 5 +/- 48,434 Singapore Dollar +/- 5 +/- 1,624,504 United States Dollar +/- 5 +/- 972, Australian Dollar +/- 5 +/- 1 Hong Kong Dollar +/- 5 +/- 2,953,225 Indonesian Rupiah +/- 5 +/- 833,162 Philippine Peso +/- 5 +/- 330,394 Singapore Dollar +/- 5 +/- 1,682,030 Indian Rupee +/- 5 +/- 471,078 United States Dollar +/- 5 +/- 446,233 27

29 NOTES TO THE FINANCIAL STATEMENTS 2 FINANCIAL INSTRUMENTS, RISK MANAGEMENT OBJECTIVE AND POLICIES (CONTINUED) Liquidity risk Liquidity risk is the risk that the Fund will encounter difficulty in meeting its financial obligations. The Manager manages this risk by maintaining sufficient level of liquid assets to meet anticipated payment and cancellations of unit by unitholders, 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 cash flows Between one month Within to one one month year Total RM RM RM Amount due to Manager - management fee 139, ,733 - cancellation of units 73,701-73,701 Amount due to Trustee 5,434-5,434 Auditors remuneration - 3,875 3,875 Tax agent s fee - 116, ,506 Other payables and accruals - 1,321 1, , , , Amount due to Manager - management fee 220, ,584 - cancellation of units 291, ,816 Amount due to Trustee 8,578-8,578 Amount due to brokers 2,394,369-2,394,369 Auditors remuneration - 9,877 9,877 Tax agent s fee - 117, ,571 Other payables and accruals 24,930 5,989 30,919 Forward foreign currency contracts at fair value through profit or loss 167, ,887 3,108, ,437 3,241,601 28

30 NOTES TO THE FINANCIAL STATEMENTS 2 FINANCIAL INSTRUMENTS, RISK MANAGEMENT OBJECTIVE AND POLICIES (CONTINUED) Credit risk Credit risk refers to the ability 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. The settlement terms of amount due from brokers are governed by the relevant rules and regulations as prescribed by the respective stock exchanges. 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 following table sets out the credit risk concentration of the Fund: 2018 Cash and cash Other equivalents assets* Total RM RM RM Financial - AAA 40,036,770-40,036,770 - NR - 1,949,034 1,949,034 Oil & Gas - NR - 52,490 52,490 Others - NR - 3,089 3,089 40,036,770 2,004,613 42,041,383 29

31 NOTES TO THE FINANCIAL STATEMENTS 2 FINANCIAL INSTRUMENTS, RISK MANAGEMENT OBJECTIVE AND POLICIES (CONTINUED) Credit risk (continued) The following table sets out the credit risk concentration of the Fund (continued): 2017 Cash and cash Other equivalents assets* Total RM RM RM Financial - AAA 6,347,392-6,347,392 - NR - 1,009,488 1,009,488 Industrial - NR - 2,114,779 2,114,779 Others - NR - 343, ,184 6,347,392 3,467,451 9,814,843 *Other assets consist of dividend receivables, amount due from Manager and amount due from brokers. The financial assets of the fund are neither past due nor impaired. Capital risk The capital of the Fund is represented by equity consisting of unitholders 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 shareholders. 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 shareholders and benefits for other stakeholders and to maintain a strong capital base to support the development of the investment activities of the Fund. 30

32 NOTES TO THE FINANCIAL STATEMENTS 3 FAIR VALUE ESTIMATION Financial instruments comprise financial assets and financial liabilities. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value of financial assets traded in active markets (such as trading securities) is based on quoted market prices at the close of trading on the period end date. The fund utilizes the current bid price for financial assets which fall within the bid-ask spread. An active market is a market in which transactions for the asset take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of financial assets that are not traded in an active market is determined by using valuation techniques. (i) Fair value hierarchy The table below analyses financial instruments carried at fair value. The different levels have been defined as follows: Quoted prices (unadjusted) in active market for identical assets or liabilities (Level 1) Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2) Inputs for the asset and liability that are not based on observable market data (that is, unobservable inputs) (Level 3) The level in the fair value hierarchy within which the fair value measurement is categorized in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgment, considering factors specific to the asset or liability. The determination of what constitutes observable requires significant judgment by the Fund. The Fund considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary and provided by independent sources that are actively involved in the relevant market. 31

33 NOTES TO THE FINANCIAL STATEMENTS 3 FAIR VALUE ESTIMATION (CONTINUED) (i) Fair value hierarchy (continued) The following table analyses within the fair value hierarchy the Fund s financial assets (by class) measured at fair value: Level 1 Level 2 Level 3 Total 2018 RM RM RM RM Financial assets at fair value through profit or loss - quoted equities 46,770, ,770, Financial assets at fair value through profit or loss - quoted equities 137,768, ,768,132 Financial liabilities at fair value through profit or loss - Forward foreign currency contracts - (167,887) - (167,887) Investments whose values are based on quoted market prices in active markets, and are therefore classified within Level 1, include active listed equities 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 unquoted fixed income securities and forward foreign 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 nontransferability, which are generally based on available market information. (ii) The carrying values of cash and cash equivalents, dividend receivable, amount due from Manager, amount due from brokers and all current liabilities except for forward foreign currency contracts are a reasonable approximation of the fair values due to their short term nature. 32

34 NOTES TO THE FINANCIAL STATEMENTS 4 MANAGEMENT FEE In accordance with the Prospectus, the Manager is entitled to a management fee at a rate not exceeding 2.50% per annum of the NAV of the Fund calculated on a daily basis. For the financial period ended 31 October 2018, the management fee is recognised at a rate of 1.80% (2017: 1.80%) per annum of the NAV of the Fund calculated on a daily basis. There will be no further liability to the Manager in respect of management fee other than the amounts recognised above. 5 TRUSTEE FEE In accordance with the Prospectus, the Trustee is entitled to an annual fee at a rate not exceeding 1.00% per annum of the NAV of the Fund, exclusive of foreign sub-custodian fee. For the financial period ended 31 October 2018, the Trustee fee is recognised at a rate of 0.07% (2017:0.07%) per annum on the NAV of the Fund, inclusive of local custodian fee but exclusive of foreign sub-custodian fee, calculated on daily basis. There will be no further liability to the Trustee in respect of trustee fee other than the amounts recognised above. 33

35 NOTES TO THE FINANCIAL STATEMENTS 6 TAXATION 6 months 6 months financial financial period ended period ended RM RM Current taxation - local 10,985 7,010 - foreign 63, ,575 74, ,585 The numerical reconciliation between net (loss)/profit before taxation multiplied by the Malaysian statutory tax rate and tax expense of the Fund is as follows: Net (loss)/profit before taxation (11,607,873) 8,544,912 Tax at Malaysian statutory rate of 24% (2017: 24%) (2,785,890) 2,050,779 Tax effects of: Investment loss not deductible for tax purposes/ Profit not subject to tax 2,361,948 (2,737,396) Expenses not deductible for tax purposes 199, ,755 Restriction on tax deductible expenses for unit trust funds 224, ,862 Income subject to different tax rate 10,985 7,010 Foreign income subject to foreign tax rate 63, ,575 Tax expense 74, ,585 34

36 NOTES TO THE FINANCIAL STATEMENTS 7 DISTRIBUTION Distribution to unitholders is from the following sources: 6 months 6 months financial financial period ended period ended RM RM Dividend income - 874,560 Interest income - - Realised gain on sale of investments - 1,035,437 Gross realised income - 1,909,997 Less: Expenses - (369,677) - 1,540,320 Gross/Net distribution per unit (sen) Ex-date Gross distribution per unit is derived from gross realised income less expenses divided by the number of units in circulation, while net distribution per unit is derived from gross realised income less expenses and taxation divided by the number of units in circulation. 35

37 NOTES TO THE FINANCIAL STATEMENTS 8 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS RM RM Designated at fair value through profit or loss - quoted equities - local 4,082,904 8,843,315 - quoted equities - foreign 42,687, ,924,817 46,770, ,768,132 Net (loss)/gain on assets at fair value through profit or loss - realised (loss)/gain on sale of investments (6,328,528) 9,744,996 - unrealised loss on changes in fair value (5,742,629) (2,619,418) (12,071,157) 7,125,578 (a) Quoted equities local (i) Quoted equities - local as at 31 October 2018 are as follows: Aggregate Fair Percentage Quantity cost value of NAV RM RM % REITS IGB Real Estate Investment Trust 2,430,300 3,205,737 4,082, Total quoted equities local 2,430,300 3,205,737 4,082, Unrealised gain on quoted equities local 877,167 Total quoted equities local 4,082,904 36

38 NOTES TO THE FINANCIAL STATEMENTS 8 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED) (a) Quoted equities - local (continued) (ii) Quoted equities - local as at 31 October 2017 are as follows: Aggregate Fair Percentage Quantity cost value of NAV RM RM % REITS IGB Real Estate Investment Trust 1,630,300 2,006,297 2,673, Trading/Services Malaysia Airports Holdings Bhd 172,600 1,476,196 1,429, Industrial Products Press Metal Aluminium Holding Bhd 384,000 1,468,378 1,701, Warrants Gamuda Bhd - Warrant ( ) 2,431,500 3,450,104 3,039, Total quoted equities local 4,618,400 8,400,975 8,843, Unrealised gain on quoted equities local 442,340 Total quoted equities local 8,843,315 37

39 NOTES TO THE FINANCIAL STATEMENTS 8 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED) (b) Quoted equities - foreign (i) Quoted equities - foreign as at 31 October 2018 are as follows: Aggregate Fair Percentage Quantity cost value of NAV RM RM % Australia Industrials Sydney Airport Ord NPV 46, , , China Consumer Services China Xinhua Education Group 1,650,000 2,821,802 1,805, Financials A-Living Services Co Ltd 277,500 2,085,462 1,401, Oil & Gas China Longyuan Power Group 712,000 2,613,668 2,260, Hong Kong REITS Link REIT 23, , , Technology HKBN Ltd 762,000 3,496,282 4,782, Utilities CK Infrastructure Holdings Ltd 45,000 1,477,644 1,374,

40 NOTES TO THE FINANCIAL STATEMENTS 8 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED) (b) Quoted equities foreign (continued) (i) Quoted equities - foreign as at 31 October 2018 are as follows (continued): Aggregate Fair Percentage Quantity cost value of NAV RM RM % Indonesia Industrials Pembangunan Perumahan Persero 2,648,500 1,620, , Singapore REITS AIMS AMP Capital Industrial REIT 250, ,436 1,011, Ascendas Real Estate Investment Trust 493,000 3,771,825 3,752, CDL Hospitality Trusts 490,600 2,653,425 2,148, Cromwell European REIT 1,019,000 2,713,250 2,540, ESR-REIT 1,087,520 1,367,526 1,576, Frasers Logistic & Industrial Trust 1,470,360 3,953,029 4,529, Keppel-KBS US REIT 384,000 1,415, , Manulife US REIT 1,505,758 4,820,906 4,473, Mapletree Industrial Trust 276,600 1,602,964 1,545, Mapletree Logistics Trust 797,900 2,921,672 2,915, Mapletree North Asia Com Trust 861,300 2,455,772 2,913, ,636,038 28,670,393 28,314, Right Keppel-KBS US REIT -Rights 113,280-30, Total quoted equities foreign 14,914,010 44,646,565 42,687, Unrealised loss on quoted equities foreign (1,959,466) Total quoted equities foreign 42,687,099 39

41 NOTES TO THE FINANCIAL STATEMENTS 8 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED) (b) Quoted equities foreign (continued) (ii) Quoted equities - foreign as at 31 October 2017 are as follows: Aggregate Fair Percentage Quantity cost value of NAV RM RM % Hong Kong Basic Materials United Co RUSAL PLC 1,649,000 4,843,719 4,498, Consumer Services China Maple Leaf Edu Sys Ltd 300,000 1,483,082 1,373, China Yuhua Edu Corp Ltd 696,000 1,421,219 1,555, China New Higher Edu Group Ltd 3,932,000 6,374,892 10,023, ,928,000 9,279,193 12,952, Industrials Beijing Capital International Airport 645,000 3,744,957 4,471, China Everbright International Ltd 1,140,000 6,317,049 6,789, China Resources Cement Holdings 750,000 2,044,391 2,139, China State Construction International Holdings Ltd 1,286,250 8,429,519 7,646, ,821,250 20,535,916 21,046, Utilities Beijing Ent Water Group Ltd 2,398,000 8,315,456 8,519, ENN Energy Holdings Ltd 116,000 3,598,202 3,598, ,514,000 11,913,658 12,118, Financials Shimao Property Holdings Ltd 787,000 7,423,918 6,975,

42 NOTES TO THE FINANCIAL STATEMENTS 8 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED) (b) Quoted equities foreign (continued) (ii) Quoted equities - foreign as at 31 October 2017 are as follows (continued): Aggregate Fair Percentage Quantity cost value of NAV RM RM % India Industrials Dilip Buildcon Ltd 76,457 2,624,947 4,238, PNC Infratech Ltd 237,535 2,660,177 3,120, ,992 5,285,124 7,359, Indonesia Basic Materials Aneka Gas Industri Tbk PT 5,450,200 1,882, , Industrials Wijaya Karya Persero Tbk PT 7,974,200 5,532,280 4,901, PT United Tractors Tbk 67, , , Pembangunan Perumahan Persero 9,686,353 10,964,793 8,613, ,727,753 17,089,598 14,240, Telecommunications Telekomunikasi Indonesia 1,135,400 1,481,299 1,427, Singapore Financials City Developments Ltd 110,700 3,786,234 4,443, Yanlord Land Group Ltd 619,200 3,553,073 3,443, Ascendas Real Estate Inv Trust 194,200 1,568,537 1,647, Viva Industrial Trust 953,600 2,194,620 2,888, Frasers Logistic & Industrial Trust 1,834,600 4,863,301 6,326, Mapletree Industrial Trust 828,400 4,806,963 4,980, GuocoLand Ltd 190,000 1,446,793 1,410, Mapletree Commercial Trust 657,300 2,939,254 3,165, Mapletree Greater China 1,042,000 2,565,233 3,803, ,430,000 27,724,008 32,110,

43 NOTES TO THE FINANCIAL STATEMENTS 8 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED) (b) Quoted equities foreign (continued) (ii) Quoted equities - foreign as at 31 October 2017 are as follows (continued): Aggregate Fair Percentage Quantity cost value of NAV RM RM % Philippines Industrials Megawide Construction Corp 1,577,900 2,266,079 2,178, Utilities Energy Development Corp 9,349,300 4,020,923 4,428, United States Financials Manulife US REIT 2,256,228 7,361,932 8,592, Total quoted equities foreign 57,940, ,107, ,924, Unrealised gain on quoted equities foreign 7,816,951 Total quoted equities foreign 128,924,817 42

44 NOTES TO THE FINANCIAL STATEMENTS 9 CASH AND CASH EQUIVALENTS RM RM Cash and bank balances 40,036,770 4,966,462 Deposits with a licensed financial institution - 1,380,353 40,036,770 6,346,815 Weighted average effective interest rates per annum and weighted average maturity of deposit with a licensed financial institution are as follows: % % Deposit with licensed financial institutions Deposit with licensed financial institutions have an average maturity of nil day (2017: 1 day). 10 FORWARD FOREIGN CURRENCY CONTRACTS As at 31 October 2018, there is no (2017: two) forward currency contracts outstanding. The notional principal amount of the outstanding forward currency contracts amounted to RM nil (2017: RM53,878,718). The forward currency contracts entered into during the financial period were for hedging against the currency exposure arising from the investment in the foreign quoted securities denominated in United States Dollar. As the Fund has not adopted hedge accounting during the financial period, the change in the fair value of the forward currency contract is recognised immediately in the statement of comprehensive income. 11 NUMBER OF UNITS IN CIRCULATION No. of units No. of units As at the beginning of the financial period 230,244, ,416,000 Creation of units arising from applications during the financial period 1,629,000 19,740,744 Creation of units arising from distribution during the financial period - 3,024,256 Cancellation of units during the financial period (30,534,000) (61,855,000) As at the end of the financial period 201,339, ,326,000 43

45 NOTES TO THE FINANCIAL STATEMENTS 12 TRANSACTIONS WITH BROKERS (i) Details of transactions with the top 10 brokers for the 6 months financial period ended 31 October 2018 are as follows: Percentage Percentage of total Brokerage of total Name of brokers Value of trade trade fees brokerage RM % RM % Citigroup Global Markets Ltd 33,982, , CLSA Ltd 33,868, , CCB International Securities Ltd 14,883, , UOB Kay Hian Pte Ltd 14,348, , Macquarie Bank (HK) Ltd 14,108, , Morgan Stanley & Co International PLC 12,092, , China International Capital Co HK Sec Ltd 11,844, , Bloomberg Tradebook LLC 10,734, , JP Morgan Securities (HK) Ltd 10,672, , Credit Suisse First Boston (HK) Ltd 9,097, , Others 66,010, , ,645, , (ii) Details of transactions with the top 10 brokers for the 6 months financial period ended 31 October 2017 are as follows: Percentage Percentage of Brokerage of total Name of brokers Value of trade total trade fees brokerage RM % RM % Macquarie Bank Ltd 42,561, , CLSA Ltd 22,682, , Pt.Mandiri Sekuritas 22,416, , Cr Suisse First Boston (HK) Ltd 20,461, , DBS Securities (S) Pte Ltd 19,220, , UOB Kay Hian Pte Ltd 17,012, , PT CIMB Securities 16,961, , Citigroup Global Markets Ltd 15,079, , CIMB-Gk Securities Pte Ltd 14,361, , Instinet Pacific Ltd 13,152, , Others 112,302, , ,211, ,

46 NOTES TO THE FINANCIAL STATEMENTS 12 TRANSACTIONS WITH BROKERS (CONTINUED) Included in transactions with brokers are trades conducted on normal terms in the stockbroking industry with Affin Hwang Investment Bank Berhad, company related to the Manager amounting to RM633,574 (2017: RM1,323,930). The manager is at the opinion that all transaction with the related company have been entered in the normal course of business at agreed terms between the related parties. 13 UNITS HELD BY THE MANAGER AND PARTIES RELATED TO THE MANAGER The related parties of and its relationships with the Fund are as follows: Related parties Affin Hwang Asset Management Berhad Affin Hwang Investment Bank Berhad Affin Bank Berhad ( ABB ) Subsidiaries and associates of ABB as disclosed in its financial statements Director of Affin Hwang Asset Management Berhad Non-executive Chairman of Affin Bank Berhad Relationship The Manager Holdings company of the Manager Ultimate holding company of the Manager Subsidiary and associated companies of the ultimate holding company of the Manager Director of the Manager Non-executive Chairman of the ultimate holding company of the Manager The Manager: No. of units RM No. of units RM Affin Hwang Asset Management Berhad (The units are held legally for booking purposes) 2,544 1,118 58,282 31,589 Parties related to the Manager: Director of Affin Hwang Asset Management Berhad (The units are held beneficially) 1,347, ,134 1,113, ,631 45

47 NOTES TO THE FINANCIAL STATEMENTS 14 MANAGEMENT EXPENSE RATIO ( MER ) MER 6 months 6 months financial financial period ended period ended % % MER is derived from the following calculation: MER = (A + B + C + D + E) x 100 F A = Management fee B = Trustee fee C = Auditors remuneration D = Tax agent s fee E = Other expenses, excluding goods and services tax on transaction costs F = Average NAV of the Fund calculated on a daily basis The average NAV of the Fund for the financial period calculated on a daily basis is RM103,927,034 (2017: RM153,700,728). 15 PORTFOLIO TURNOVER RATIO ( PTR ) 6 months 6 months financial financial period ended period ended PTR (times) PTR is derived from the following calculation: (Total acquisitions for the financial period + total disposals for the financial period) 2 Average NAV of the Fund for the financial period calculated on a daily basis where: total acquisitions for the financial period = RM89,404,838 (2017: RM146,515,816) total disposals for the financial period = RM149,591,970 (2017: RM162,197,673) 46

48 NOTES TO THE FINANCIAL STATEMENTS 16 SEGMENT INFORMATION The strategic asset allocation committee of the Investment Manager makes the strategic resource allocations on behalf of the fund. The Fund has determined the operating segments based on the reports reviewed by this committee that are used to make strategic decisions. The committee is responsible for the Fund s entire portfolio and considers the business to have a single operating segment. The committee s asset allocation decisions are based on a single, integrated investment strategy and the Fund s performance is evaluated on an overall basis. The reportable operating segments derive their income by seeking investments to achieve targeted returns consummate with an acceptable level of risk within each portfolio. These returns consist of interest, dividends and gains on the appreciation in the value of investments, and are derived from quoted equities in Australia, China, Hong Kong, Indonesia, India, Malaysia, Philippine, Singapore and United State. There were no changes in the reportable segments during the financial period. The internal reporting provided to the committee for the Fund s assets, liabilities and performance is prepared on a consistent basis with the measurement and recognition principles of MFRS and IFRS. 47

49 AFFIN HWANG SELECT ASIA PACIFIC (EX-JAPAN) REITS AND INFRASTRUCTURE FUND STATEMENT BY THE MANAGER I, Teng Chee Wai, as the Director of Affin Hwang Asset Management Berhad, do hereby state that in my opinion as the Manager, the financial statements set out on pages 9 to 47 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 October 2018 and of its financial performance, changes in equity and cash flows for the financial period ended 31 October 2018 in accordance with the Malaysian Financial Reporting Standards and International Financial Reporting Standards For and on behalf of the Manager, AFFIN HWANG ASSET MANAGEMENT BERHAD TENG CHEE WAI EXECUTIVE DIRECTOR/MANAGING DIRECTOR Kuala Lumpur 13 December

50 DIRECTORY OF SALES OFFICE HEAD OFFICE Affin Hwang Asset Management Berhad Ground Floor Tel : Menara Boustead Fax : , Jalan Raja Chulan Toll free no : Kuala Lumpur. customercare@affinhwangam.com SELANGOR Affin Hwang Asset Management Berhad A-7-G Jaya One No. 72A, Jalan Universiti Petaling Jaya Tel: Selangor Fax: PENANG Affin Hwang Asset Management Berhad No. 10-C-24 Precinct 10 Jalan Tanjung Tokong Tel : Penang Fax : PERAK Affin Hwang Asset Management Berhad 13A Persiaran Greentown 7 Greentown Business Centre Tel : Ipoh Perak Fax : MELAKA Affin Hwang Asset Management Berhad Ground Floor, No. 584, Jalan Merdeka Taman Melaka Raya Tel : / Melaka Fax : JOHOR Affin Hwang Asset Management Berhad 1 st Floor, Lot 93 Jalan Molek 1/29, Taman Molek Johor Bahru Tel : Johor. Fax : SABAH Affin Hwang Asset Management Berhad Lot No. B-2-09, 2 nd Floor Block B, Warisan Square Jalan Tun Fuad Stephens Kota Kinabalu Tel : Sabah. Fax :

51 DIRECTORY OF SALES OFFICE (CONTINUED) SARAWAK Affin Hwang Asset Management Berhad Ground Floor, No. 69 Block 10, Jalan Laksamana Cheng Ho Kuching Tel : Sarawak. Fax : Affin Hwang Asset Management Berhad 1 st Floor, Lot 1291 Jalan Melayu, MCLD Miri Tel : Sarawak Fax :

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