Forthe nancialyearended 30September2018

Transcription

1 AnnualReport TACOMETFUND Forthe nancialyearended 30September2018 ( T)

2 Contents Contents 1 Key Performance Data 2 Manager s Report 4 Market Review 7 Economic Outlook 7 Market Outlook And Investment Strategy 8 Size Of Unitholdings 8 Soft Commission 9 Trustee s Report 10 Statement By The Manager 11 Independent Auditors' Report To The Unitholders Of 12 Statement Of Comprehensive Income 15 Statement Of Financial Position 16 Statement Of Changes In Equity 17 Statement Of Cash Flows 18 Notes To The Financial Statements 19 Corporate Information 54 1

3 Key Performance Data Year ended Year ended Year ended 30/09/ /09/ /09/2016 PORTFOLIO COMPOSITION (% OF NAV) Technology Consumer Products Finance Industrial Products Mining Construction Plantations Energy Infrastructure Trading/Services Properties Collective Investment Scheme Quoted Shares Derivative Instrument Cash (Net of Liabilities) Total Investment Total Net Asset Value (RM'000) 17,557 # 18,171 19,805 Units In Circulation (Units '000) 48,579 48,183 53,342 Net Asset Value Per Unit (RM) # Management Expense Ratio (MER) (%) * Portfolio Turnover Ratio (PTR) (times) ** # Refer to audited account Note 13. * The MER for the current financial year has decrease as compared to the previous year's result due to decrease in total management expenses of the Fund. ** The PTR for the current financial year has decrease as compared to the previous year's result due to decrease in average transaction value of the Fund. UNIT PRICES ^ NAV Per Unit (RM) Highest NAV Per Unit for the Year (RM) Lowest NAV Per Unit for the Year (RM) ^ Ex-distribution 2

4 Year ended Year ended Year ended 30/09/ /09/ /09/2016 DISTRIBUTION/UNIT SPLIT Gross Distribution Per Unit (sen) - Final Interim Nil Nil 2.50 Net Distribution Per Unit (sen) - Final Interim Nil Nil 2.50 Date of Distribution 28/09/18 (2.00) 29/09/17 (2.50) 30/09/16 (1.00) Nil Nil 31/03/16 (2.50) TOTAL RETURN (%) Capital Return Income Return Total Return of Fund Total Return of the benchmark -FTSE Bursa Malaysia Emas Index (FBM Emas) AVERAGE TOTAL RETURN (%) Fund Benchmark Period 1 Year (30/09/ /09/2018) Years (30/09/ /09/2018) Years (30/09/ /09/2018) ANNUAL TOTAL RETURN (%) Fund Benchmark Period 30/09/ /09/ /09/ /09/ /09/ /09/ /09/ /09/ /09/ /09/ Source : Lipper for Investment Management Past performance is not necessarily indicative of future performance. Unit prices and investment returns may go down, as well as up. 3

5 Manager s Report Fund Category/Type Fund Objective Performance Benchmark Fund s Distribution Policy Fund s Performance and Investment Strategies Employed Analysis of Fund s Performance Equity: Growth & Income The Fund aims to provide a channel for investors to invest in low-priced securities offering good value with great upside potential with a view of diversifying towards medium-priced securities and blue chips as the market moves higher over the medium to long-term. FTSE Bursa Malaysia Emas Index (FBM EMAS) The Fund may declare annual/interim distribution (if any) during its financial year. The Fund was managed within its investment objective for the financial year under review and met its objectives of providing capital and income return. For the financial year ended 30th September 2018, the Fund posted a positive return of 1.14% and outperformed the benchmark FTSE Bursa Malaysia EMAS Index s return of 0.02%. 30/09/18 30/09/17 % Change NAV/unit (RM) ~^ Total NAV (RM 000) 17,557~^ 18, ~ Refer to audited account Note 13. ^ After adjustment for a gross distribution of 2.00 sen per unit on 28 September Income Distribution (%) Capital Return # (%) Total Return (%) # Capital Return components: Equity Cash and cash equivalents 4

6 30/09/18 30/09/17 % Change FTSE Bursa Malaysia EMAS Index 12, , Performance Chart Distributions During the financial year, the Fund declared a final distribution of 2.00 sen per unit on 28 September The effect on NAV arising from the distribution for the financial year ended 30 September 2018 is as follows: Date 30/09/18 30/09/17 NAV Before Distribution (RM) Gross Distribution (RM) NAV After Distribution (RM) sen 2.50 sen Asset Allocation 30/09/18 30/09/17 Cash (Net of Liabilities) 21.36% Derivative Instrument 0.20% Cash (Net of Liabilities) 11.23% Equity 78.64% Equity 88.57% 5

7 Asset allocation during the financial year under review was primarily in equities with a small portion in money market and derivative instrument for liquidity purposes. The allocation of assets is a reflection of the financial market and economic outlook moving forward. Hence, there is a difference in asset allocation choices between periods. We are mindful of the current volatility of the market and will continue to trade wisely. Top Investments Top 5 Stocks As at 30/09/2018 % NAV Public Bank Berhad 9.23 Malayan Banking Berhad 9.10 Tenaga Nasional Berhad 8.35 CIMB Group Holdings Berhad 4.90 TA Asia Pacific REITs Income Fund (TAREITs) 4.33 As at 30/09/2017 % NAV Malayan Banking Berhad Public Bank Berhad 9.44 Tenaga Nasional Berhad 8.52 Sime Darby Berhad 6.78 Gabungan AQRS Berhad 6.16 Past performance is not necessarily indicative of future performance. Unit prices and investment returns may go down, as well as up. 6

8 Market Review While global indices continued their uptrend towards second half of 2017, however, the local bourse failed to sustain its strong momentum through third quarter of 2017 ( 3Q17 ) as corporate earnings disappointed for two consecutive quarters. Generally, more companies failed to meet the street s estimates with 37% underperformers for 3Q17 results from 32% in 1Q17. The stronger-than-expected 3Q17 Malaysia Gross Domestic Product ( GDP ) growth of 6.2% did not excite the market. Foreign funds net sold the local market by more than RM1.5 billion from August 2017 to November 2017 before they turned net buyer again in December 2017 (+RM959.9 million) following the news on significant progress made for the United States ( US ) tax overhaul plan. Malaysia s Budget 2018 announced was well within expectation and did not provide much boost to the market. Overall, foreign funds pumped in net amount of RM10.3 billion in 2017 after having net sold for the past three years. Foreign buying momentum continued into January 2018, pushing the FBMKLCI up by 4.0% to 1,868.58, a daily closing level not seen since Most regional markets rose around 4% but the MSCI Asia Pacific gained 5.9% due to exceptional gains achieved in the Hong Kong market (+9.9%) and China s CSI 300 index (+6.1%). Foreign funds net bought RM3.4 billion in Malaysian equities in January 2018, in tandem with strong buying activities by foreign funds in the region, especially in Korea, Taiwan and India. Many factors contributed to the optimism in equities in January The slash in tax rates by the Trump government has led the Federal Open Market Committee ( FOMC ) members to revise up the 2018 US GDP growth forecast to 2.5% from 2.1% in anticipation of better earnings. FBMKLCI took a turn in May 2018, tumbled 6.9% as foreign funds dumped Malaysian stocks following the surprise win by Pakatan Harapan ( PH ) which ended Barisan Nasional ( BN ) s 61 years rule of the government on policies uncertainty and decision on cancellation of mega infrastructure projects, the abolition of Goods and Services Tax ( GST ) and the potential abolishment of toll. Total net outflow of foreign funds from Malaysian equities was RM5.6 billion for the month, erasing all the net inflows up to April 2018, resulting in a net outflow of RM1.9 billion as at end of May FBMKLCI remains in consolidation mood since May 2018 on domestic policies issues as the new PH government still searching for best solution to address the mountain debts burden inherited by the BN government. Furthermore, buying interest was largely tampered by speculation that more tariffs will be slapped on China by the US which finally imposed 10% on US$200 billion worth of Chinese goods from 24 September 2018 and a hike to 25% in Jan In retaliation, China sought permission from the World Trade Organization to impose trade sanctions on the US, spooking investors further. Economic Outlook At the moment, Malaysia has a very strong economy, and is moving towards becoming a high-income economy. The Malaysian economy expanded 5.4% in the first quarter of 2018 from 5.9% in the preceding quarter. The central bank expects the country s gross domestic product to grow between 5.5% and 6% this year. Meanwhile, World Bank Malaysia lead economist Dr Richard Record said it was important that Malaysia s debt is 7

9 managed vigilantly and efficiently, in a prudent manner with transparency. Meantime, the Malaysian government is committed to maintaining its 2.8% deficit target by the end of this year. The government is currently looking at not just revenue and expenditure to consider the measures to be taken, but also efficiency measures for current spending and capital expenditure. It is vital to recognise that the vast majority or 97.7% of Malaysia s debt was denominated in ringgit, so there was limited risk, particularly for foreign exchange. In addition, a majority of Malaysia s debt is medium term, with almost 70% having a maturity period of over three years. Market Outlook And Investment Strategy It is going to be a difficult investment market in the short term given the amount of uncertainty and the lethargy in the investing community. The US president, Donald Trump, continued to hog the limelight with his policies targeting the flow of trades. With trade barriers coming up all around the US, many businesses are scrambling to set up production capacity in America to cater to domestic demand. The side effect of this is that economic activities in the US have become more robust. Hence, the Dow Jones Index continued to hit successive record highs and we expect this to continue for the short term albeit increased volatility. For other markets, especially emerging markets, the impact of trade war will weigh in heavily. The Malaysian economy, being a well-diversified one, appears to be absorbing these shocks or changes well. Finance Minister, Lim Guan Eng, mentioned that the country must not fall into the austerity trap but must continue to spend wisely to develop the nation s infrastructure in order to expand its GDP base. Hence, we believe that the November 2018 budget for Malaysia would still be very much focus on development growth. This could be the needed catalyst for the market in the fourth quarter for the year. Identifying the right sectors and stocks in line with the government's blueprint will be critical for fund performance. Size Of Unitholdings - As at 30 September 2018 Size of Holdings (units) No. of Unitholders % of Unitholders No. of Units Held ('000) % of Units Held 5,000 and below % % 5,001-10, % % 10,001-50, % 9, % 50, , % 30, % 500,001 and above % 6, % Total % 48, % 8

10 Soft Commission The Manager retains soft commissions received from brokers only if the goods and services are of demonstrable benefits to the unitholders as allowed under the Securities Commission's Guidelines on Unit Trust Funds. The soft commission received include research and advisory services which are used to support the investment decision making process and are of demonstrable benefit to Unitholders of the Fund. 9

11 TRUSTEE'S REPORT TO THE UNITHOLDERS OF TA COMET FUND We, CIMB Commerce Trustee Berhad, being the Trustee of ('the Fund')' are of the opinion that TA Investment Management Berhad ('the Manager'), acting in the capacity as Manager of the Fund, has fulfilled its duties in the following manner for the financial year ended 30 September (a) (b) (c) (d) 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; Valuation and pricing of the Fund has been carried out in accordance with the Deed and relevant regulatory requirements; Creation and cancellation of units have been carried out in accordance with the Deed and relevant regulatory requirements; and The distribution of return by the Fund is relevant and reflects the investment objectives of the Fund. For and on behalf of CIMB Commerce Trustee Berhad Lee Kooi Yoke Chief Operating Officer Kuala Lumpur, Malaysia 23 November

12 STATEMENT BY THE MANAGER We, CHOO SWEE KEE and MOHAMMED A'REEFF BIN ABDUL KHALID, being two of the Directors of TA INVESTMENT MANAGEMENT BERHAD, do hereby state that, in the opinion of the Manager, the accompanying financial statements set out on pages 15 to 53, are drawn up so as to give a true and fair view of the financial position of TA COMET FUND as at 30 September 2018 and of its financial performance and cash flows for the financial year ended on that date in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards. On behalf of the Manager, CHOO SWEE KEE MOHAMMED A'REEFF BIN ABDUL KHALID Kuala Lumpur, Malaysia 23 November

13 INDEPENDENT AUDITORS REPORT TO THE UNITHOLDERS OF TA COMET FUND Report on the Audit of the Financial Statements Opinion We have audited the financial statements of, which comprise the statement of financial position as at 30 September 2018, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 15 to 53. In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Fund as at 30 September 2018, and of its financial performance and its cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards. Basis of Opinion We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors Responsibilities for the Audit of the Financial Statements section of our auditors report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence and Other Ethical Responsibilities We are independent of the Fund and Manager of the Fund in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants ( By- Laws ) and the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants ( IESBA Code ), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code. Information Other than the Financial Statements and Auditors Report Thereon The Manager of the Fund is responsible for the other information. The other information comprises the information included in the Annual Report of the Fund, but does not include the financial statements of the Fund and our auditors report thereon. Our opinion on the financial statements of the Fund does not cover the other information and we do not express any form of assurance conclusion thereon. 12

14 Information Other than the Financial Statements and Auditors Report Thereon (continued) In connection with our audit of the financial statements of the Fund, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Fund or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Manager and Trustee for the Financial Statements The Manager of the Fund is responsible for the preparation of financial statements of the Fund that give a true and fair view in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards. The Manager is also responsible for such internal control as the Manager determines is necessary to enable the preparation of financial statements of the Fund that are free from material misstatement, whether due to fraud or error. The Trustee is responsible for ensuring that the Manager maintains proper accounting and other records as are necessary to enable true and fair presentation of the financial statements. In preparing the financial statements of the Fund, the Manager is responsible for assessing the ability of the Fund to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Manager either intend to liquidate the Fund or to cease operations, or have no realistic alternative but to do so. Auditors Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements of the Fund are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial statements of the Fund, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. 13

15 Auditors Responsibilities for the Audit of the Financial Statements (continued) 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 internal control of the Fund. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Manager. Conclude on the appropriateness of the Manager s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Fund to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the financial statements of the Fund or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Fund to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial statements of the Fund, including the disclosures, and whether the financial statements of the Fund represent the underlying transactions and events in a manner that gives a true and fair view. We communicate with the Manager regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Other Matter This report is made solely to the unitholders of the Fund, as a body, and for no other purpose. We do not assume responsibility to any other person for the content of this report. KPMG PLT (LLP LCA & AF 0758) Chartered Accountants Chua See Guan Approval Number: 03169/02/2019 J Chartered Accountant Petaling Jaya, Selangor 23 November

16 STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER Note RM RM INCOME Dividend income 553, ,612 Interest income and other income 91,197 68,943 Net gain on: -financial assets at fair value through profit or loss ("FVTPL") 6 85,514 1,685, ,202 2,162,172 EXPENSES Manager's fee 3 284, ,350 Trustee's fee 4 36,400 35,000 Auditors' remuneration 8,500 8,500 Tax agent's fee 3,750 3,800 Investment committee's remuneration 7,200 7,000 Brokerage and other transaction fees 129, ,835 Administrative fees and expenses 15,078 32, , ,710 Net income before tax 245,352 1,601,462 Income tax expense 5 - (18,386) Net income after tax, representing total comprehensive income for the financial year 245,352 1,583,076 Net income after tax is made up of the following: Net realised income 12(b) 945, ,475 Net unrealised (loss)/income 12(c) (700,476) 1,232, ,352 1,583,076 Distribution for the financial year: Net distribution ,584 1,204,565 Gross/net distribution per units (sen) The accompanying notes form an integral part of the financial statements. 15

17 STATEMENT OF FINANCIAL POSITION AS AT 30 SEPTEMBER Note RM RM ASSETS Investments 6 13,766,286 16,091,617 Deposit with financial institutions 7 2,999,260 2,903,809 Dividend receivable 133,050 67,863 Interest receivable Amount due from future brokers 8 21,268 21,268 Amount due from the Manager 10 15,705 1,790 Cash at banks 1,588, ,250 TOTAL ASSETS 18,525,048 19,570,071 LIABILITIES Amount due to stockbrokers 9-198,634 Amount due to the Manager 10 21,425 24,735 Amount due to Trustee 2,913 3,088 Other payables and accruals 14,900 12,600 Distribution payable ,584 1,204,565 TOTAL LIABILITIES 1,010,822 1,443,622 EQUITY Unitholders' capital 12(a) 13,113,548 12,642,157 Retained earnings 12(b),(c) 4,400,678 5,484,292 NET ASSET VALUE ("NAV") ATTRIBUTABLE TO UNITHOLDERS 17,514,226 18,126,449 TOTAL EQUITY AND LIABILITIES 18,525,048 19,570,071 NUMBER OF UNITS IN CIRCULATION 12(a) 48,579,223 48,182,616 NAV PER UNIT The accompanying notes form an integral part of the financial statements. 16

18 STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2018 Retained Unitholders' earnings capital Note 12(b) Total Note 12(a) and (c) NAV RM RM RM At 1 October ,057,786 5,722,556 19,780,342 Total comprehensive income for the financial year - 1,583,076 1,583,076 Creation of units 186, ,124 Reinvestment of units 514, ,445 Cancellation of units (2,732,973) - (2,732,973) Distribution 616,775 (1,821,340) (1,204,565) At 30 September ,642,157 5,484,292 18,126,449 At 1 October ,642,157 5,484,292 18,126,449 Total comprehensive income for the financial year - 245, ,352 Creation of units 1,766,842-1,766,842 Reinvestment of units 1,159,354-1,159,354 Cancellation of units (2,812,187) - (2,812,187) Distribution 357,382 (1,328,966) (971,584) At 30 September ,113,548 4,400,678 17,514,226 The accompanying notes form an integral part of the financial statements. 17

19 STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER RM RM CASH FLOWS FROM OPERATING AND INVESTING ACTIVITIES Proceeds from sales of investments 16,691,500 17,626,462 Purchases of investments (14,479,289) (16,055,203) Dividend received 488, ,456 Interest received 90,882 68,602 Manager's fee paid (287,579) (316,199) Trustee's fee paid (36,575) (35,000) Payments for other fees and expenses (161,881) (211,160) Net cash from operating and investing activities 2,305,362 1,476,958 CASH FLOWS FROM FINANCING ACTIVITIES Cash received from units created 1,752, ,500 Cash paid on units cancelled (2,812,187) (2,733,823) Cash distribution paid (45,211) (18,979) Net cash used in financing activities (1,104,471) (2,563,302) NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 1,200,891 (1,086,344) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE FINANCIAL YEAR 3,387,059 4,473,403 CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR 4,587,950 3,387,059 CASH AND CASH EQUIVALENTS COMPRISE: Cash at banks 1,588, ,250 Deposits with financial institutions 2,999,260 2,903,809 Cash and cash equivalents 4,587,950 3,387,059 The accompanying notes form an integral part of the financial statements. 18

20 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER THE FUND, THE MANAGER AND THEIR PRINCIPAL ACTIVITIES ("the Fund") was constituted pursuant to the execution of a Deed of Trust dated 20 September 1999 and Supplemental Deed (collectively referred to as "the Deed") between the Manager, TA Investment Management Berhad, the Trustee, CIMB Commerce Trustee Berhad and the registered holders of the Fund. The principal activity of the Fund is to invest in "Authorised Investments" as defined under Clause 1 of the Deed, which include stocks and shares of companies quoted on Bursa Malaysia Securities Berhad ("Bursa Malaysia") and other recognised stock exchanges, futures contracts traded on Bursa Malaysia Derivatives Berhad, derivatives instruments, and short term money market investments. The Fund commenced operations on 1 October 1999 and will continue its operations until terminated by the Trustee as provided under Clause 23 of the Deed. The Manager, TA Investment Management Berhad, a company incorporated in Malaysia, is a wholly-owned subsidiary of TA Securities Holdings Berhad. Its ultimate holding company is TA Enterprise Berhad, a company listed on the Main Market of Bursa Malaysia Securities Berhad. The principal activities of the Manager are the establishment and management of unit trust funds and fund management. The Manager is licensed to carry out dealing in securities and fund management activities under the Capital Markets and Services Act The financial statements were authorised for issue by the Board of Directors of the Manager in accordance with a resolution on 23 November SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.1 Basis of Preparation (a) Statement of compliance The financial statements of the Fund have been prepared in accordance with Malaysian Financial Reporting Standards ("MFRS") and International Financial Reporting Standards ("IFRS"), collectively known as the "Standards". The following are accounting standards, amendments and interpretations of the MFRS framework that have been issued by the Malaysian Accounting Standards Board ( MASB ) but have not been adopted by the Fund: 19

21 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) 2.1 Basis of Preparation (contd.) (a) Statement of Compliance (contd.) MFRSs, interpretations and amendments effective for annual periods beginning on or after 1 January 2018 MFRS 9, Financial Instruments (2014) MFRS 15, Revenue from Contracts with Customers Clarifications to MFRS 15, Revenue from Contracts with Customers IC Interpretation 22, Foreign Currency Transactions and Advance Consideration Amendments to MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards (Annual Improvements to MFRS Standards Cycle) Amendments to MFRS 2, Share-based Payment Classification and Measurement of Share-based Payment Transactions Amendments to MFRS 4, Insurance Contracts Applying MFRS 9 Financial Instruments with MFRS 4 Insurance Contracts Amendments to MFRS 128, Investments in Associates and Joint Ventures (Annual Improvements to MFRS Standards Cycle) Amendments to MFRS 140, Investment Property Transfers of Investment Property MFRSs, interpretations and amendments effective for annual periods beginning on or after 1 January 2019 MFRS 16, Leases IC Interpretation 23, Uncertainty over Income Tax Treatments Amendments to MFRS 3, Business Combinations (Annual Improvements to MFRS Standards Cycle) Amendments to MFRS 9, Financial Instruments Prepayment Features with Negative Compensation Amendments to MFRS 11, Joint Arrangements (Annual Improvements to MFRS Standards Cycle) Amendments to MFRS 112, Income Taxes (Annual Improvements to MFRS Standards Cycle) Amendments to MFRS 119, Employee Benefits - Plan Amendment, Curtailment or Settlement Amendments to MFRS 123, Borrowing Costs (Annual Improvements to MFRS Standards Cycle) Amendments to MFRS 128, Investments in Associates and Joint Ventures Long-term Interests in Associates and Joint Ventures 20

22 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) 2.1 Basis of Preparation (contd.) (a) Statement of Compliance (contd.) MFRSs, interpretations and amendments effective for annual periods beginning on or after 1 January 2020 Amendments to MFRS 2, Share-based Payment Amendments to MFRS 3, Business Combinations Amendments to MFRS 6, Exploration for and Evaluation of Mineral Resources Amendment to MFRS 14, Regulatory Deferral Accounts Amendments to MFRS 101, Presentation of Financial Statements Amendments to MFRS 108, Accounting Policies, Changes in Accounting Estimates and Errors Amendments to MFRS 134, Interim Financial Reporting Amendments to MFRS 137, Provision, Contigent Liabilities and Contingent Amendments to MFRS 138, Intangible Assets Amendments to IC Interpretation 12, Service Concession Arrangements Amendments to IC Interpretation 19, Extinguishing Financial Liabilities with Equity Instruments Amendments to IC Interpretation 20, Stripping Costs in the Production Phase of a Surface Mine Amendments to IC Interpretation 22, Foreign Currency Transactions and Advance Consideration Amendments to IC Interpretation 132, Intangible Assets Web Site Costs MFRSs, interpretations and amendments effective for annual periods beginning on or after 1 January 2021 MFRS 17, Insurance Contracts MFRSs, interpretations and amendments effective for annual periods beginning on or after a date yet to be confirmed Amendments to MFRS 10, Consolidated Financial Statements and MFRS 128, Investments in Associates and Joint Ventures Sale or Contribution of Assets between an Investor and its Associate or Joint Venture The Fund plans to apply the abovementioned accounting standards, amendments and interpretations: from the annual period beginning on 1 October 2018 for those accounting standards, amendments and intepretation that are effective for annual periods beginning on or after 1 January 2018 except for Amendments to MFRS 1, Amendments to MFRS 2, Amendments to MFRS 4, Amendments to MFRS 128 and Amendments to MFRS 140 which are not applicable to the Fund; 21

23 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) 2.1 Basis of Preparation (contd.) (a) Statement of Compliance (contd.) from the annual period beginning on 1 October 2019 for those accounting standard, amendments and intepretation that are effective for annual periods beginning on or after 1 January 2019, except for MFRS 16, Amendments to MFRS 3, Amendments to MFRS 11, Amendments to MFRS 112, Amendments to MFRS 119, Amendments to MFRS 123 and Amendments to MFRS 128 which are not applicable to the Fund; and from the annual period beginning on 1 October 2020 for those accounting standard, amendments and interpretation that are effective for annual periods beginning on or after 1 January 2020, except for Amendments to MFRS 2, Amendments to MFRS 3, Amendments to MFRS 6, Amendments to MFRS 14, Amendments to MFRS 138 and Amendments to IC Interpretation 12, Amendments to IC Interpretation 20, Amendments to IC Interpretation 132 which are not applicable to the Fund. The Fund does not plan to apply MFRS 17, Insurance Contracts that is effective for annual periods beginning on 1 January 2021 as it is not applicable to the Fund. The initial application of the abovementioned accounting standards, amendments or interpretations are not expected to have any material impacts to the financial statements of the Fund. (b) Basis of measurement The financial statements of the Fund have been prepared on the historical cost basis, unless otherwise indicated in Note 2.2. (c) Functional and presentation currency The financial statements are presented in Ringgit Malaysia ("RM"), which is the Fund's functional currency. 22

24 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) 2.2 Significant Accounting Policies (contd.) (a) Financial Assets Financial assets 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. When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss ("FVTPL"), directly attributable transaction costs. A financial asset is derecognised when the asset is disposed and the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received is recognised in profit or loss. Financial assets and liabilities are offset and the net amount reported in the financial statement when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The Fund determines the classification of its financial assets at initial recognition, and the categories include financial assets at FVTPL and receivables. (i) Financial assets at FVTPL FVTPL category comprises financial assets that are held for trading, including derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) or finanical assets that are specifically designated into this category upon initial recognition. Derivaties that are linked to and must be settled by delivery of unquoted equity instruments whose fair values cannot be reliably measured are measured at cost. Other financial assets categorised as FVTPL are subsequently measured at their fair values with the gain or loss recognised in profit or loss. 23

25 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) 2.2 Significant Accounting Policies (contd.) (a) Financial Assets (contd.) (ii) Receivables Financial assets with fixed or determinable payments that are not quoted in an active market are classified as receivables. The Fund includes short-term receivables in this classification. Subsequent to initial recognition, financial assets categorised as receivables are measured at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when such financial assets are derecognised or impaired, and through the amortisation process. (b) Cash and Cash Equivalents Cash and cash equivalents comprise cash at banks and short-term deposits with financial institution that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in fair value. (c) Impairment of Financial Assets All financial assets (except for financial assets categorised as fair value through profit or loss) are assessed at each reporting date whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset. Losses expected as a result of future events, no matter how likely, are not recognised. For an investment in an equity instrument, a significant or prolonged decline in the fair value below its cost is an objective evidence of impairment. If any such objective evidence exists, then the impairment loss of the financial asset is estimated. An impairment loss in respect of receivables is recognised in profit or loss and is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows discounted at the asset s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed, to the extent that the asset s carrying amount does not exceed what the carrying amount would have been had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in profit or loss. 24

26 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) 2.2 Significant Accounting Policies (contd.) (d) Classification of Realised and Unrealised Gains and Losses Unrealised gains and losses comprise changes in the fair value of financial instruments for the year and from reversal of prior year's unrealised gains and losses for financial instruments which were realised (i.e. sold, redeemed or matured) during the financial year. The relised gain/(loss) on sale of investments is measured as the difference between the net disposal proceeds and the carrying amount of the investments. The carrying amount for determining the realised gain/(loss) on sale of investments is based on weighted average cost method. (e) Financial Liabilities Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability. Financial liabilities, within the scope of MFRS 139, Financial Instruments: Recognition and Measurement 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. The Fund's financial liabilities are recognised initially at fair value plus any directly attributable transaction costs and subsequently measured at amortised cost using the effective interest rate method. A financial liability is derecognised when the obligation under the liability is extinguished. Gains and losses are recognised in profit or loss when the liabilities are derecognised. (f) Unitholders Capital The unitholders' capital of the Fund is classified as an equity instrument. Distribution equalisation represents the average distributable amount included in the creation and cancellation prices of units. This amount is either refunded to unitholders by way of distribution and/or adjusted accordingly when units are cancelled. 25

27 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) 2.2 Significant Accounting Policies (contd.) (g) Distribution Distribution is at the discretion of the Fund. A distribution to the Fund's unitholders is accounted for as a deduction from realised reserves except where distribution is sourced out of distribution equalisation which is accounted for as a deduction from unitholders' capital. A proposed distribution is recognised as a libility in the period in which it is approved. (h) Foreign Currency Transactions in foreign currencies are translated to the functional currency of the Fund at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are retranslated to the functional currency at the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies are not retranslated at the end of the reporting date except for those that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation of available-for-sale equity instrsuments or a financial instrument designated as a hedge of currency risk, which are recognised in other comprehensive income. (i) Income Recognition Income is recognised to the extent that it is probable that the economic benefits will flow to the Fund and the income can be reliably measured. Income is measured at the fair value of consideration received or receivable. Dividend income is recognised when the Fund's right to receive payment is established. Interest income is recognised using the effective interest rate method. 26

28 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) 2.2 Significant Accounting Policies (contd.) (j) Income Tax Current tax assets or liabilities position as at reporting date are measured at the net amount expected to be recovered from or paid to the tax authorities. The tax rates and tax laws used to compute the tax expense for the financial year are those that are enacted or substantively enacted by the reporting date. Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity. Deferred tax is provided for, using the liability method, on taxable temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences to the extent that it is probable that the future taxable profits will be available against which the temporary difference can be utilised. (k) Segment Reporting For management purposes, the Fund is managed by two main portfolios, namely equity instruments and money market instruments. Each segment engages in separate investing activities and the operating results are regularly reviewed by the Investment Manager and Investment Committee. The Investment Committee assumes the role of chief operating decision maker, for performance assessment purposes and to make decisions about resources allocated to each investment segment. (l) Significant Accounting Estimates and Judgments The preparation of the Fund's financial statements requires the Manager to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability in the future. 27

29 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) 2.2 Significant Accounting Policies (contd.) (l) Significant Accounting Estimates and Judgments (contd.) The Manager classifies the quoted equity securities as financial instruments at FVTPL as the Fund is an open-ended fund that may sell its investments in the short-term for profit-taking or to meet unitholders' redemptions. No other major judgments have been made by the Manager in applying the Fund's accounting policies. There are no key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. 3. MANAGER'S FEE Manager's fee is computed on a daily basis at 1.50% (2017: 1.50%) per annum of the NAV of the Fund, as agreed by the Trustee and the Manager. 4. TRUSTEE'S FEE Trustee's fee is computed on a daily basis at 0.10% (2017: 0.10%) per annum of the NAV of the Fund, subject to a minimum of RM35,000 (2017: RM35,000) per annum. 5. INCOME TAX EXPENSE RM RM Tax expense for the financial year - Under provision in prior years - 18,386 Domestic income tax is calculated at the Malaysian statutory tax rate of 24% of the estimated assessable profit for the financial year. Dividends, interest and other income derived from sources outside Malaysia are exempted from Malaysian income tax. However, such income may be subject to tax in the country from which it is derived. The taxation charge for the financial year is on taxable dividend income derived from foreign countries, calculated at the rates prevailing in these countries. In accordance with Schedule 6 of the Income Tax Act 1967, interest income earned by the Fund is exempted from Malaysian tax. A reconciliation of income tax expense applicable to net income before tax at the statutory income tax rate to income tax expense at the effective income tax rate of the Fund is as follows: 28

30 5. INCOME TAX EXPENSE (CONTD.) RM RM Net income before tax 245,352 1,601,462 Taxation at Malaysian statutory rate of 24% 58, ,351 Effects of interest and other income not subject to tax (175,248) (518,921) Effects of expenses not deductible for tax purposes 46,099 57,086 Under provision in prior years - 18,386 Restriction on tax deductible expenses for unit trust funds 70,265 77,484 Income tax expense for the financial year - 18, INVESTMENTS RM RM Financial assets at FVTPL: Quoted equity securities in Malaysia 11,763,228 15,109,042 Quoted equity securities outside Malaysia 1,245, ,897 Collective investment scheme in Malaysia 757, ,228 Quoted derivative instrument in Malaysia - 36,450 13,766,286 16,091,617 Net gain on financial assets at FVTPL comprises: Net realised gain on disposals 785, ,016 Net unrealised (loss)/gain on changes in fair value (700,476) 1,232,601 85,514 1,685,617 Financial assets at FVTPL as at 30 September 2018 are as detailed below: (a) Quoted equity securities in Malaysia Name of Counter Quantity Cost Fair Value % of NAV Unit RM RM % Industrial Products Petronas Chemicals Group Bhd 75, , , Supermax Corporation Bhd 141, , , Top Glove Corporation Bhd 31, , , Uchi Technologies Bhd 60, , , ,700 1,356,905 1,678,

31 6. INVESTMENTS (CONTD.) (a) Quoted equity securities in Malaysia (contd.) Name of Counter Quantity Cost Fair Value % of NAV Unit RM RM % Financial Services AMMB Holdings Bhd 105, , , CIMB Group Holdings Bhd 143, , , Malayan Banking Bhd 162,985 1,355,498 1,593, Public Bank Bhd 64,700 1,203,459 1,616, ,925 3,982,448 4,499, Construction Malaysia Resources Corporation Bhd 484, , , Properties IOI Properties Group Bhd 295, , , SP Setia Bhd 100, , , , , , Plantation Sime Darby Plantation Bhd 67, , , Technology Globetronics Technology Bhd 175, , , JF Technology Bhd 393, , , Managepay Systems Bhd 1,730, , , ,298,333 1,383,097 1,081, Trading/Services Airasia Bhd 120, , , Axiata Group Bhd 41, , , Genting Bhd 61, , , Genting Malaysia Bhd 55, , , Maxis Bhd 45, , , Tenaga Nasional Bhd 94,700 1,083,870 1,462, ,030 2,801,016 3,049, Total Quoted Equity Securities in Malaysia 4,445,988 11,336,511 11,763,

32 6. INVESTMENTS (CONTD.) (b) Quoted equity securities outside Malaysia Name of Counter Quantity Cost Fair Value % of NAV Unit RM RM % Hong Kong Tecnology Pentamaster International Ltd 1,210, , , Australia Mining Mount Gibson Iron Ltd 220, , , Sandfire Resources NL 10, , , , , , Total Quoted Equity Securities outside Malaysia 1,440,500 1,058,863 1,245, (c) Collective investment scheme in Malaysia Name of Counter Quantity Cost Fair Value % of NAV Unit RM RM % Unit Trust TA Asia Pacific REITs Income Fund* 1,472, , , * A fund managed by the Manager Total Collective Investment Scheme in Malaysia 1,472, , , TOTAL FINANCIAL ASSETS AT FVTPL 7,358,670 13,116,949 13,766, EXCESS OF FAIR VALUE OVER COST 649,337 31

33 7. DEPOSITS WITH FINANCIAL INSTITUTIONS RM RM This is a placement with: - Licensed bank 1,452,878 1,358,099 - Licensed investment bank 1,546,382 1,545,710 Total deposits with financial institutions 2,999,260 2,903,809 The weighted average effective interest rate ("WAEIR") per annum and average maturity of deposit with a financial institution as at the reporting date are as follows: WAEIR Maturity (% p.a.) (Days) Short-term placement AMOUNT DUE FROM FUTURES BROKERS The amount relates to margin deposits placed by the Fund with futures brokers. The Fund was not a party to any open futures contracts as at the end of the financial year. 9. AMOUNT DUE TO STOCKBROKERS Amount due from/(to) stockbrokers relate to disposal/purchase of investments which remained outstanding as at the end of the financial year. The normal credit term for these balances is 3 days (2017: 3 days). 10. AMOUNT DUE FROM/(TO) THE MANAGER Amounts due from the Manager relates to the amount receivable from the Manager arising from creation of units amounting to RM14,836 (2017: RM945) and rebate of Manager's fee of RM869 (2017: RM845) at the end of the financial year. Amount due to the Manager relates to the amounts payable to the Manager arising from cancellation of units amounting to Nil (2017: Nil) and accruals for Manager's fee of RM21,425 (2017: RM24,735) at the end of the financial year. The normal credit term for creation/cancellation of units is 10 days (2017: 10 days) and the normal credit term for Manager's fee is 30 days (2017: 30 days). 32

34 11. DISTRIBUTION Distribution to unitholders declared on 28 September 2018 (2017: 29 September 2017) is made from the following sources: RM RM Dividend income 553, ,612 Interest income 91,197 68,943 Net realised gain on sales of investments 656, ,181 Previous years' realised gains 383,138 1,470,865 1,684,163 2,240,601 Less: Expenses (355,197) (419,261) Distribution out of realised reserve (Note 12(b)) 1,328,966 1,821,340 Distribution equalisation (Note 12(a)) (357,382) (616,775) Distribution for the financial year 971,584 1,204,565 Analysed as: Cash distribution 37,052 45,211 Reinvestment of units 934,532 1,159,354 Distribution payable 971,584 1,204,565 Units in circulation: Final distribution 28 September 2018/ ,579,223 48,182,616 Final distribution: Gross/net distribution per unit (sen) Included in the above distribution was a gross amount of RM383,138 (2017: RM1,470,865) from the previous financial years' realised reserve. 12. NET ASSET VALUE ATTRIBUTABLE TO UNITHOLDERS Note RM RM Unitholders' capital (a) 13,113,548 12,642,157 Retained earning - Realised reserve - Distributable (b) 3,351,302 3,734,440 - Unrealised reserve - Non-distributable (c) 1,049,376 1,749,852 17,514,226 18,126,449 33

35 12. NET ASSET VALUE ATTRIBUTABLE TO UNITHOLDERS (CONTD.) (a) Unitholders' capital No of units RM No of units RM At beginning of the financial year 48,182,616 12,642,157 53,342,369 14,057,786 Creation of units 4,624,365 1,766, , ,124 Reinvestment of units 3,076,026 1,159,354 1,378, ,445 Cancellation of units (7,303,784) (2,812,187) (7,001,771) (2,732,973) 48,579,223 12,756,166 48,182,616 12,025,382 Distribution - 357, ,775 At end of the financial year 48,579,223 13,113,548 48,182,616 12,642,157 (b) Realised reserve - Distributable RM RM At beginning of the financial year 3,734,440 5,205,305 Net realised income for the financial year 945, ,475 Distribution out of realised reserve (1,328,966) (1,821,340) Net decrease in realised retained earnings for the financial year (383,138) (1,470,865) At end of the financial year 3,351,302 3,734,440 (c) Unrealised reserve - Non-distributable RM RM At beginning of the financial year 1,749, ,251 Net unrealised (loss)/income for the financial year (700,476) 1,232,601 At end of the financial year 1,049,376 1,749, NAV PER UNIT The quoted financial assets have been valued at the bid prices at the close of business. In accordance with the Deed, quoted financial assets are stated at the last done market price in the calculation of NAV attributable to unitholders per unit for the issuance and redemption of units. 34

36 13. NAV PER UNIT (CONTD.) A reconciliation of NAV attributable to unitholders for the purpose of issuance/redemption of units at end of reporting period and the NAV attributable to unitholders as disclosed in the financial statements is as follows: RM RM/Unit RM RM/Unit NAV attributable to unitholders for issuance/ redemption of units 17,557, ,170, Effect from adopting bid prices as fair value (42,923) (0.0009) (44,314) (0.0009) NAV attributable to unitholders as disclosed in the financial statements 17,514, ,126, TRANSACTIONS WITH INVESTMENT BANKS/BROKERS Details of transactions with the investment banks/brokers during the financial year are as follows: Percentage Percentage to total to total Brokerage brokerage Name of investment Value of value of fees and fees and banks/brokers trade trade commission commission RM % RM % TA Securities Holdings Bhd* 12,991, , Public Investment Bank Bhd 5,518, , Affin Hwang Investment Bank Bhd 2,604, , Maybank Investment Bank Bhd 2,421, , Alliance Investment Bank Bhd 1,737, , CIMB Investment Bank Bhd 1,366, , RHB Investment Bank Bhd 1,196, , JF Apex Securities Bhd 299, , Others 400, ,535, , * A company related to the Manager. The directors of the Manager are of the opinion that the dealings with a company related to the Manager have been transacted at an arm's length basis. 35

37 15. MANAGEMENT EXPENSE AND PORTFOLIO TURNOVER RATIOS (a) Management Expense Ratio The management expense ratio for the financial year ended 30 September 2018 is 1.93% (2017: 2.01%). This ratio represents total management expenses expressed as an annualised percentage of the Fund's average NAV, calculated on a daily basis. Brokerage and other transaction fees on financial assets at FVTPL are trades related and are not classified as management expenses. (b) Portfolio Turnover Ratio The portfolio turnover ratio for the financial year ended 30 September 2018 is 0.76 times (2017: 0.84 times). This ratio represents the average of the total acquisitions and disposals of the Fund for the year over the average NAV of the Fund for the financial year calculated on a daily basis. 36

38 16. SEGMENT INFORMATION The Manager and the Investment Committee of the Fund are responsible for allocating resources available to the Fund in accordance with the overall investment strategies as set out in the Investment objective and policy. The Fund is managed by two segments: - A portfolio of equity instruments; and - A portfolio of money market instruments. The investment objective is to achieve steady capital appreciation by investing in instruments with the potential of substantial value appreciation over the medium to long term period. There have been no changes in reportable segments in the current financial year. The segment information is presented below: Equity Money Equity Money Instruments market Instruments market portfolio portfolio Total portfolio portfolio Total RM RM RM RM RM RM Dividend income 553, , , ,612 Interest income - 91,197 91,197-68,943 68,943 Net gain on: financial assets at FVTPL 85,514-85,514 1,685,617-1,685,617 Total segment operating income for the financial year 639,005 91, ,202 2,093,229 68,943 2,162,172 Investments 13,766,286-13,766,286 16,091,617-16,091,617 Deposits with financial institutions - 2,999,260 2,999,260-2,903,809 2,903,809 Other assets 133, ,839 67, ,337 Total segment assets 13,899,336 3,000,049 16,899,385 16,159,480 2,904,283 19,063,763 Other liabilities , ,634 Total segment liabilities , ,634 There was no transaction between operating segments during the financial year. 37

39 16. SEGMENT INFORMATION (CONTD.) Expenses of the Fund are not considered part of the performance of any operating segment. The following table provides a reconciliation between the net reportable segment income and operating income: RM RM Net reportable segment operating income 730,202 2,162,172 Expenses (484,850) (560,710) Net income before tax 245,352 1,601,462 Income tax expense - (18,386) Net income after tax 245,352 1,583,076 In addition, certain assets and liabilities are not considered to be part of the total assets or liabilities of the operating segments. The following table provides a reconciliation between the reportable total segment assets and total segment liabilities and total assets and total liabilities of the Fund: RM RM Total segment assets 16,899,385 19,063,763 Amount due from future brokers 21,268 21,268 Amount due from the Manager 15,705 1,790 Cash at banks 1,588, ,250 Total assets of the Fund 18,525,048 19,570,071 Total segment liabilities - 198,634 Amount due to the Manager 21,425 24,735 Amount due to Trustee 2,913 3,088 Other payables and accruals 14,900 12,600 Distribution payables 971,584 1,204,565 Total liabilities of the Fund 1,010,822 1,443, FINANCIAL INSTRUMENTS (a) Classification of financial instruments The Fund's financial assets and financial liabilities are measured on an ongoing basis either at fair value or at amortised cost based on their respective classification. The significant accounting policies in Note 2 describe how the classes of financial instrument are measured, and how income and expenses, including fair value gains and losses, are recognised. The following table analyses the financial assets and financial liabilities of the Fund in the statement of financial position as at the end of reporting period by the class of financial instrument to which they are assigned, and therefore by the measurement basis. 38

40 17. FINANCIAL INSTRUMENTS (CONTD.) (a) Classification of financial instruments (contd.) 2018 Financial Financial Receivables liabilities at assets at at amortised amortised FVTPL cost cost Total RM RM RM RM Assets Investments 13,766, ,766,286 Deposits with financial institutions - 2,999,260-2,999,260 Dividend receivable - 133, ,050 Interest receivable Amount due from futures brokers - 21,268-21,268 Amount due from the Manager - 15,705-15,705 Cash at banks - 1,588,690-1,588,690 Total financial assets 13,766,286 4,758,762-18,525,048 Liabilities Amount due to the Manager ,425 21,425 Amount due to Trustee - - 2,913 2,913 Other payables and accruals ,900 14,900 Distribution payable , ,584 Total financial liabilities - - 1,010,822 1,010,822 Net gains arising from financial instruments Dividend income 553, ,491 Interest income from deposits with financial institutions - 91,197-91,197 Net gain on financial - assets at FVTPL 85, ,514 39

41 17. FINANCIAL INSTRUMENTS (CONTD.) (a) Classification of financial instruments (contd.) 2017 Financial Financial Receivables liabilities at assets at at amortised amortised FVTPL cost cost Total RM RM RM RM Assets Investments 16,091, ,091,617 Deposits with financial institutions - 2,903,809-2,903,809 Dividend receivable - 67,863-67,863 Interest receivable Amount due from futures brokers - 21,268-21,268 Amount due from the Manager - 1,790-1,790 Cash at banks - 483, ,250 Total financial assets 16,091,617 3,478,454-19,570,071 Liabilities Amount due to the stockbroker , ,634 Amount due to the Manager ,735 24,735 Amount due to Trustee - - 3,088 3,088 Other payables and accruals ,600 12,600 Distribution payable - - 1,204,565 1,204,565 Total financial liabilities - - 1,443,622 1,443,622 Net gains and (losses) arising from financial instruments Dividend income 407, ,612 Interest income from deposits with financial institutions 1,318 67,625-68,943 Net gain on financial assets at FVTPL 1,685, ,685,617 40

42 17. FINANCIAL INSTRUMENTS (CONTD.) (b) Financial instruments that are carried at fair value The Fund's financial assets at FVTPL are carried at fair value. The fair values of these financial assets were determined using prices in active markets for identical assets. Quoted equity securities Fair values are determined directly by reference to their published market bid price at the end of the reporting period. For instruments quoted on Bursa Malaysia and other stock exchanges, the bid prices are determined by reference to the bid prices as published by Bloomberg. Quoted Collective investment scheme Fair value is determined directly by reference to its published NAV per units on a preceeding day basis at the end of reporting period. (c) Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value The following are classes of financial instruments that are not carried at fair value and whose carrying amounts approximate the fair values due to their short term nature of the investments. - Deposits with financial institutions - Dividend receivable - Interest receivable - Amount due from futures brokers - Amount due to stockbrokers - Amount due from/(to) the Manager - Cash at banks - Amount due to Trustee - Other payables and accruals - Distribution payable 41

43 17. FINANCIAL INSTRUMENTS (CONTD.) (d) Fair value hierarchy The Fund uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Level 3: Financial assets at Level 1 Level 2 Level 3 Total FVTPL: RM RM RM RM 2018 Quoted equity securities in Malaysia 11,763, ,763,228 Quoted equity securities outside Malaysia 1,245, ,245,179 Collective investment scheme in Malaysia - 757, ,879 13,008, ,879-13,766, Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. prices) or indirectly (i.e. derived from prices). Inputs for the asset or liability that are not based on observable market data (unobservable inputs). Quoted equity securities in Malaysia 15,109, ,109,042 Quoted equity securities outside Malaysia 603, ,897 Collective investment scheme in Malaysia - 342, ,228 Quoted derivative instrument in Malaysia 36, ,450 15,749, ,228-16,091,617 42

44 18. FINANCIAL RISKS AND MANAGEMENT OBJECTIVES AND POLICIES (a) Introduction The Fund maintains investment portfolio in a variety of financial instruments as dictated by its Trust Deed and investment management strategy. The Fund is exposed to various risks including market risk (which includes interest rate risk, equity price risk and currency risk), credit risk and liquidity risk. Whilst these are the most important types of financial risks inherent in each type of financial instruments, the Manager and the Trustee would like to highlight that the list does not purport to constitute an exhaustive list of all the risks inherent in an investment in the Fund. The Fund's objective in managing risks is the creation and protection of unitholders' value. Risk is inherent in the Fund's activities, but it is managed through a process of ongoing identification, measurement and monitoring of risk. Financial risk management is also carried out through sound internal control systems and adherence to the investments restrictions as stipulated in the Deed, the Securities Commission's Guidelines on Unit Trust Funds and the Capital Markets and Services Act (b) Risk management structure The Fund's Manager is responsible for identifying and managing risks. The Board of Directors of the Manager are ultimately responsible for the overall risk management approach within the Fund. (c) Risk measurement and reporting system Monitoring and controlling risk mechanism are primarily set up and to be performed based on limits established by the Manager and the Trustee. These limits reflect the investment strategy and market environment of the Fund as well as the level of the risk that the Fund is willing to accept. In addition, the Fund monitors and measures the overall risk bearing capacity in relation to aggregated risk exposures across all risks type and activities. (d) Risk mitigation The Fund has investment guidelines that set out its overall business strategies, its tolerance for risk and its general risk management philosophy. The Manager also has a Compliance Department to ensure that the Fund complies with the various regulations and guidelines as stipulated in its Deed, the Securities Commission's Guidelines on Unit Trust Funds and the Capital Markets and Services Act

45 18. FINANCIAL RISKS AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) (e) Excessive risk concentration Risk concentration indicates the relative exposure of the Fund's performance to developments affecting a particular industry or geographical location. Concentrations of risk arise when a number of financial instruments or contracts are entered into with the same counterparty, or where a number of counterparties are engaged in similar business activities, or activities in the same geographical region, or have similar economic features that would cause their abilities to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations of foreign exchange risk may arise if the Fund has a significant net position in a single foreign currency, or aggregate net position in several currencies that tend to move together. In order to avoid excessive concentration of risk, the Fund's policies and procedures include specific guidelines to focus on maintaining a diversified portfolio in accordance with the Deed, investment management's guidelines and the Securities Commission's Guidelines on Unit Trust Funds. Portfolio diversification across a number of sectors and industries minimises the risk not only of any single company's securities becoming worthless but also all holdings suffering uniformly adverse business conditions. Specifically, the Deed and Securities Commission's Guidelines on Unit Trust Funds limit the Fund's exposure to a single entity/industry sector to a certain percentage of its NAV. (f) Market risk Market risk is the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in market variables such as interest rate, equity prices and foreign exchange rates. The maximum risk resulting from financial instruments equals their fair values at the reporting date. (i) Interest rate risk Deposits with financial institutions are particularly sensitive to movements in interest rates. Interest rate risk sensitivity The following table demonstrates the sensitivity of the Fund's interest income for the financial period to a reasonably possible change in interest rates, with all other variables held constant. 44

46 18. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) (f) Market risk (contd.) (i) Interest rate risk (contd.) Interest rate risk sensitivity (contd.) The sensitivity is the effect of the assumed changes in interest rates on: - - the net interest income for one year, based on the floating rate financial assets held at the end of the reporting period; and changes in fair value of investments for the year, based on revaluing fixed rate financial assets at the end of the reporting period. Sensitivity of Changes Sensitivity changes in in basis of interest fair value of points * income investment RM RM , ,314 - * the assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment. An opposite movement in basis points shown above would have resulted in an equivalent, but opposite, impact. Interest rate risk exposure The following table analyses the Fund's interest rate risk exposure. The Fund's assets and liabilities are included at fair value and categorised by the earlier of contractual repricing or maturity dates. 45

47 18. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) (f) Market risk (contd.) (i) Interest rate risk (contd.) (i) Interest rate risk exposure (contd.) Non-exposure to interest 0-3 rate months movement Total WAEIR 2018 RM RM RM % Assets Investments - 13,766,286 13,766,286 Deposits with financial institutions 2,999,260-2,999, Other assets - 1,759,502 1,759,502 Total assets 2,999,260 15,525,788 18,525,048 Liabilities Other liabilities - 1,010,822 1,010,822 Total liabilities - 1,010,822 1,010,822 Total interest sensitivity gap 2,999,260 14,514,966 17,514, Assets Investments - 16,091,617 16,091,617 Deposits with financial institutions 2,903,809-2,903, Other assets - 574, ,645 Total assets 2,903,809 16,666,262 19,570,071 Liabilities Other liabilities - 1,443,622 1,443,622 Total liabilities - 1,443,622 1,443,622 Total interest sensitivity gap 2,903,809 15,222,640 18,126,449 46

48 18. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) (f) Market risk (contd.) (ii) Equity price risk Equity price risk is the risk of unfavourable changes in the fair values of equities as the result of changes in the equity indices and the value of individual investments. The equity price risk exposure arises from the Fund's investment in quoted equity securities. Equity price risk sensitivity Management's best estimate of the effect on the income due to a reasonably possible change in equity indices, with all other variables held constant is indicated in the table below: Effect Change in Effect on equity Market Indices equity indices on income and NAV 2018 % RM RM FTSE Bursa Malaysia Top 100 Index ,252 1,252 Hang Seng Index Australia Stock Exchange FTSE Bursa Malaysia Top 100 Index ,939 13,939 Hang Seng Index ,428 1,428 Australia Stock Exchange An opposite movement in the index shown above would have resulted in an equivalent, but opposite, impact. In practice, the actual trading results may differ from the sensitivity analysis above and the difference could be material. 47

49 18. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) (f) Market risk (contd.) (ii) Equity price risk (contd.) Equity price risk concentration The following table set out the Fund's exposure to equity price risk based on its portfolio of equity instruments as at the reporting date: RM % of NAV RM % of NAV Malaysia 12,521, ,487, Hong Kong 716, , Australia 529, , ,766, ,091, (iii) Currency risk Currency risk is the risk that the value of financial instrument will fluctuate due to changes in foreign exchange rate. The Fund invests in quoted equity instruments that are denominated in currencies other than RM. Accordingly, the value of the Fund's assets may be affected favourably or unfavourably by fluctuations in currency rates and therefore the Fund will be subject to foreign exchange risks. Currency risk sensitivity The Fund did not have any financial liabilities denominated in foreign currency as at the end of reporting period. The following table indicates the currency to which the Fund has significant exposure at the end of reporting period on its financial assets. The analysis calculates the effect of a reasonably possible movement of the currency rate against RM on equity and on income with all other variables held constant. Exchange Effect on rates as at Change in Effect on equity Exchange rates 30 Sept currency rates income and NAV RM % RM RM 2018 AUD/RM HKD/RM USD/RM

50 18. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) (f) Market risk (contd.) (iii) Currency risk (contd.) Currency risk sensitivity (contd.) Exchange Effect on rates as at Change in Effect on equity Exchange rates 30 Sept currency rates income and NAV RM % RM RM 2017 AUD/RM HKD/RM IDR/RM ,177 1,177 An opposite movement in each of the exchange rates shown above would have resulted in an equivalent, but opposite, impact. The following table sets out the Fund's exposure to foreign currency rates on its financial assets based on foreign currency net position as at the reporting date RM % of NAV RM % of NAV AUD/RM 537, , HKD/RM 1,217, , IDR/RM , USD/RM 868, (g) Credit risk Credit risk is the risk that the counterparty to a financial instrument will cause a financial loss for the Fund by failing to discharge its obligation. The Fund is exposed to the risk of credit related losses that can occur as a result of a counterparty or issuer being unable or unwilling to honour its contractual obligations to make timely payment of interest, principal and proceeds from realisation of investments. These credit risk exposure exist within financing relationships, derivatives and other transactions. 49

51 18. FINANCIAL RISKS AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) (g) Credit risk (contd.) The Manager manages the Fund's credit risk by undertaking credit evaluation and close monitoring of any changes to the issuer/counterparty's credit profile to minimise such risk. It is the Fund's policy to invest with reputable counterparties. The Manager also closely monitors the creditworthiness of the Fund's counterparties (e.g. broker, custodian, bank, etc) by reviewing their credit profile. Financial assets that are either past due or impaired There are no financial assets that are either past due or impaired at the end of reporting period. Credit risk exposure As at end of reporting period, the Fund's maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the statement of financial position. Credit quality of financial assets Rating by Rating Agency Short term credit rating of of Malaysia financial assets not at FVTPL P1 Unrated Total RM RM RM 2018 Deposits with financial institutions 2,999,260-2,999,260 Dividend receivable - 133, ,050 Interest receivable Amount due from futures brokers - 21,268 21,268 Amount due from the Manager - 15,705 15,705 Cash at banks 1,588,690-1,588,690 4,588, ,023 4,758, Deposits with financial institutions 1,358,099 1,545,710 2,903,809 Dividend receivable - 67,863 67,863 Interest receivable Amount due from futures brokers 21,268 21,268 Amount due from the Manager 1,790 1,790 Cash at banks 483, ,250 1,841,569 1,636,885 3,478,454 50

52 18. FINANCIAL RISKS AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) (h) Liquidity risk Liquidity risk is defined as the risk that the Fund will encounter difficulty in meeting its obligations associated with financial liabilities that are settled by delivering cash or another financial asset. Exposure to liquidity risk arises because of the possibility that the Fund could be required to pay its liabilities or redeem its units earlier than expected. The Fund is exposed to the risk of cash redemption of its units on a regular basis. Units sold to unitholders by the Manager are redeemable at the unitholder's option based on the Fund's NAV per unit at the time of redemption calculated in accordance with the Deed. It is the Fund's policy that the Manager monitors the Fund's liquidity position on a daily basis. The Fund also manages its obligation to pay for redemption of units when required to do so and its overall liquidity risk by requiring a 3-days notice period before redemption. The Manager's policy is to always maintain a prudent and sufficient level of liquid assets so as to meet normal operating requirements and expected redemption requests by unitholders. The following table summarises the maturity profile of the Fund's unit in issue (classified as equity instruments) and financial liabilities. The table also analyses the maturity profile of the Fund's financial assets against the Fund's contractual commitments to provide an overview of the Fund's liquidity. Less than 1 month Total 2018 RM RM Assets Investments 13,766,286 13,766,286 Deposits with financial institutions 2,999,260 2,999,260 Other assets 1,759,502 1,759,502 Total undiscounted financial assets 18,525,048 18,525,048 Liabilities Other liabilities 1,010,822 1,010,822 Total undiscounted financial liabilities 1,010,822 1,010,822 Unitholders' capital 17,514,226 17,514,226 Liquidity gap

53 18. FINANCIAL RISKS AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) (h) Liquidity risk (contd.) Less than 1 month Total 2017 RM RM Assets Investments 16,091,617 16,091,617 Deposits with financial institutions 2,903,809 2,903,809 Other assets 574, ,645 Total undiscounted financial assets 19,570,071 19,570,071 Liabilities Other liabilities 1,443,622 1,443,622 Total undiscounted financial liabilities 1,443,622 1,443,622 Unitholders' capital 18,126,449 18,126,449 Liquidity gap - - Notes: (i) Financial assets Analysis of financial assets at FVTPL into maturity groupings is based on the expected date on which these assets can be realised. Quoted equity securities have been included in the "Less than 1 month" category on the assumption that these are highly liquid investments which can be realised immediately should all of the Fund's unitholders' capital are required to be redeemed. For other assets, the analysis into maturity grouping is based on the remaining period from the end of the reporting date to the contractual maturity date or if earlier, the expected date on which the assets will be realised. (ii) Financial liabilities The maturity grouping is based on the remaining period from the end of the reporting date to the contractual maturity date. When a counterparty has a choice of when the amount is to be paid, the liability is allocated to the earliest period in which the Fund can be expected to pay. 52

54 18. FINANCIAL RISKS AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) (h) Liquidity risk (contd.) (iii) Equity As unitholders can request for redemption on their units by giving the Manager a 3- days notice period, equity is categorised as having a maturity of "Less than 1 month". However, the Fund believes that it would be able to liquidate all its investments should the need arise to satisfy all the redemption requirements of the Fund. 19. CAPITAL MANAGEMENT The primary objective of the Fund's capital management is to ensure that it maximises unitholder's value by expanding its fund size to benefit from economies of scale and achieving growth in NAV from the performance of its investments. The Fund manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Fund may issue new or bonus units, make distribution payment, or return capital to unitholder by way of redemption of units. No changes were made in the objectives, policies or processes during the financial years ended 30 September 2018 and 30 September

55 Corporate Information Manager Registered Office Board of Directors Investment Committee Members Trustee of the Fund Auditor of the Manager and the Fund Banker TA Investment Management Berhad ( T) 34th Floor, Menara TA One 22 Jalan P. Ramlee Kuala Lumpur En. Mohammed A reeff Bin Abdul Khalid (Non-Independent / Executive Director) Mr. Choo Swee Kee (Non-Independent / Executive Director) Dr. Wong Hong Meng (Independent / Non-Executive Director) Mr. Chew Chin Guan (Independent / Non-Executive Director) Choo Swee Kee (Non-Independent) Kaladher A/L Govindan (Non-Independent) Dr. Wong Hong Meng (Independent) Tay Kian Chuan (Independent) CIMB Commerce Trustee Berhad 17 th Floor, Menara CIMB Jalan Stesen Sentral 2, Kuala Lumpur Sentral Kuala Lumpur KPMG PLT Chartered Accountants Level 10, KPMG Tower 8 First Avenue, Bandar Utama Petaling Jaya, Selangor Malayan Banking Bhd Ground Floor, Wisma Genting Jalan Sultan Ismail Kuala Lumpur Secretaries Chuah Wen Pin (MAICSA ) Tan Kit Yee (MAICSA ) 54

56 Corporate Information (cont d) Management Staff Investment Team Head Office Wong Mien Chief Executive Officer Noorsazreen Binti Nordin Head of Compliance Choo Swee Kee Chief Investment Officer Jennifer Mak Fong Ching Fund Manager 23rd Floor, Menara TA One 22 Jalan P. Ramlee Kuala Lumpur Tee Ling Ling Head of Sales & Marketing Alicia Khor Head of Operations Lam Chee Mun Fund Manager Toll Free: Tel: (603) Fax: (603) Website:

57 HeadOfice Miri BusinessCentre KotaKinabalu BusinessCentre Kuching BusinessCentre Penang BusinessCentre Melaka BusinessCentre TAInvestmentManagementBerhad 23rdFloor,MenaraTAOne 22JalanP.Ramlee 50250KualaLumpur Tel: Fax: Lot1251,1stFloor,Block10 MiriConcessionLandDistrict CentrepointCommercialCentre JalanMelayu 98000Miri,Sarawak Tel: Fax: Unit4-1-02,1stFloor Block4,Api-ApiCentre JalanCentrePoint 88000KotaKinabalu,Sabah Tel: Fax: L204,1stFloor JalanTunkuAbdulRahman 93100Kuching,Sarawak Tel: Fax: ,BayanPoint MedanKampungRelau 11900PulauPinang Tel: Fax: A,JalanMerdeka TamanMelakaRaya 75000Melaka Tel: