Forthe nancialyearended 30September2016

Transcription

1 AnnualReport TACOMETFUND Forthe nancialyearended 30September2016

2 Contents Contents 1 Key Performance Data Manager s Report 2 4 Market Review Economic Outlook 8 8 Market Outlook And Investment Strategy 9 Size Of Unitholdings 9 Soft Commission 9 Trustee s Report 10 Statement By The Manager 11 Independent auditors' report to the unitholders of 12 Statement Of Comprehensive Income 14 Statement Of Financial Position 15 Statement Of Changes In Equity 16 Statement Of Cash Flows 17 Notes To The Financial Statements 18 Corporate Information 50 1

3 Key Performance Data Year Ended Year Ended Year Ended 30/09/ /09/ /09/2014 PORTFOLIO COMPOSITION (% OF NAV) Technology Consumer Products Finance Industrial Products Mining Plantations Energy Oil & Gas Infrastructure Trading/Services Properties REITs Collective Investment Scheme Exchange Traded Fund Quoted Shares Derivative Instruments Cash (Net of Liabilities) Total Investment Total Net Asset Value (RM'000) 19,805 # 19,839 23,601 Units In Circulation (Units '000) 53,342 49, Net Asset Value Per Unit (RM) # Management Expense Ratio (MER) (%) * Portfolio Turnover Ratio (PTR) (times) ** # Refer to audited account Note 14. * The MER for the current financial year has registered a increase compared to previous year. This is due to decrease in average net asset value of the Fund and total management expenses of the Fund. ** The PTR for the current financial year has registered a increase compared to the previous year. This is due to increase in average transactional value of the Fund compared with decrease in average net asset 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/ /09/2014 DISTRIBUTION/UNIT SPLIT Gross Distribution Per Unit (sen) - Final Interim Net Distribution Per Unit (sen) - Final Interim Date of Distribution 30/09/16 (1.00) 30/09/15 (2.00) 30/09/14 (3.50) 31/03/16 (2.50) 07/04/15 (1.50) 31/03/14 (2.00) 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/ /09/2016) Years (30/09/ /09/2016) Years (30/09/ /09/2016) ANNUAL TOTAL RETURN (%) Fund Benchmark Period 30/09/ /09/ /09/ /09/ /09/ /09/ /09/ /09/ /09/ /09/ Source : Lipper 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 Fund Benchmark Fund s Distribution Policy Fund Performance and Investment Strategies Employed 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 ended. 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 30 th September 2016, the Fund posted a positive return of 1.05% however the Fund underperformed the benchmark FTSE Bursa Malaysia Emas Index s return of 4.34%. The local market performance is due to several factors. One of the main reason is, positive growth in crude palm oil price hit a high of RM2,909 (highest in four years) which lifted buying in upstream plantation players. Analysis of Fund Performance 30/09/16 30/09/15 % Change NAV/unit (RM) ~^ Total NAV (RM 000) 19,805 ~^ 19, ~ Refer to audited account Note 13. ^ After adjustment for a gross distribution of 1.00 sen per unit on 30 September

6 Income Distribution (%) Capital Return # (%) Total Return (%) # Capital Return components: Equity Cash and cash equivalents 30/09/16 30/09/15 % Change FTSE Bursa Malaysia Emas Index 11, , Performance Chart Distributions During the financial year, the Fund declared an interim gross distribution of 2.50 sen per unit on 31 March 2016 and a final gross distribution of 1.00 per unit on 30 September 2016 respectively. The effect on NAV arising from the distribution for the financial year ended 30 September 2016 is as follows: Date 30/09/16 30/09/15 NAV Before Distribution (RM) Gross Distribution (RM) Final Interim Final sen Interim sen Final Interim Final sen Interim sen 5

7 NAV After Distribution (RM) Final Interim Final Interim Asset Allocation 30/09/16 30/09/15 Cash (Net of Liabilities) 21.56% Cash (Net of Liabilities) 29.22% Derivative Instruments 0.23% Equity 78.44% Equity 70.55% 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. During the financial year under review, the Fund s equity exposure averaged at 78%. The allocation of assets is a reflection of the financial market and economic outlook moving forward. Hence, there is a difference in the assets 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 30/09/2016 % NAV Tenaga Nasional Berhad 8.31 Malayan Banking Berhad 7.52 Public Bank Berhad 6.38 IOI Corporation Berhad 3.36 Sime Darby Berhad 3.32 As at 30/09/2015 % NAV Malayan Banking Berhad 6.61 Public Bank Berhad

8 Dbx Stx Europe Banks (Europe) 5.31 Maxis Berhad 5.27 OSK Holdings Berhad 4.69 Past performance is not necessarily indicative of future performance. Unit prices and investment returns may go down, as well as up. 7

9 Market Review In the first half of September 2015, investors remained on the side line as they awaited the Fed s decision on the rate hike. Meanwhile as expected, BNM decided to maintain its Overnight Policy Rate (OPR) at 3.25% although other countries around the world have been cutting interest rates to spur growth. The decision to hold OPR unchanged was largely made to deter the ringgit from further weakening as this may result in larger foreign sell-down of the market. Prime Minister Datuk Seri Najib Razak also announced that RM20billion will be injected into state owned investor Valuecap with the purpose of purchasing undervalued stocks in the local bourse. This provided a little boost to the otherwise lacklustre market. A major dampening factor during Q4 was the slump in oil price after OPEC members announced that they would be maintaining their production rate of 31.5m barrels per day and the US lifted its 40-year ban on crude oil exports, allowing Iran to export oil. Hopes of a sustained recovery in crude oil prices faded after Saudi Arabia refused to cut production despite an agreement by four major oil producers to freeze output at January 2016 levels. In June 2016, the Brexit referendum ended with 52% of the UK population voting to leave EU. The decision sparked fear through world markets and the sterling collapsed to a 30- year low. Investors scrambled to sell the pound, oil and stocks as Britain took a lurch into the unknown, becoming the first country to quit in the EU s 60-year history, a culmination of decades of suspicion over European aims of creating an ever-closer political union. The Overnight Policy Rate (OPR) was reduced by 25 bps from 3.25% to 3.00% on 13 July 2016 to sustain growth in the domestic economy. Economic Review Malaysia s GDP growth moderated from 5.0% in 2015 to 4.2% in 1Q 2016 on the back of slower investment spending growth and a decline in exports. The growth in the services sector sustained at 5.1% in 1Q 2016 compared to a similar growth rate in Meanwhile, the pace of construction sector activities slowed from 8.2% in 2015 to 7.9% in 1Q Economic Outlook The International Monetary Fund (IMF) in its July 2016 World Economic Outlook (WEO) has revised the world output growth for 2016 downward by another 0.1 percentage points to 3.1%, following a previous downward revision of 0.2 percentage points in April These two downward revisions in a row reflect a gloomy picture of the world economy. As for 2017, real GDP growth is expected to edge up moderately, registering growth of between %. Domestic demand continues to be the engine of growth by growing at 5.0%. However, the export demand is expected to improve further growing at 3.0% a year. Current account balance is expected to deteriorate this year estimated to be 1.8% of GNI, but it will rebound in 2017 as export demand improves further. The inflation rate projection for this year is maintained at 3.0%, although the second quarter rates have moderated, in anticipation of higher consumer spending in the second half of the year. Inflation is expected to ease up a bit in

10 Market Outlook And Investment Strategy Malaysia s GDP growth is anticipated to moderate from 5.0% in 2015 to a range of 4.0%- 4.5% in 2016 on the back of a moderation in consumer spending. In the revised 2016 Budget announced on 28 January, the oil price assumption was revised to average between US$30/barrel and US$35/barrel versus earlier estimates of US$48/barrel. Operating and development expenditures will be reduced by RM9 billion to maintain the 2016 fiscal budget deficit at 3.1%. Based on the above outlook, the Fund will continue to manage its portfolio of money market instruments to provide liquidity and current income, while maintaining capital stability. Size Of Unitholdings - 30 September 2016 Size of Holdings (units) No. of Unitholders %of Unitholders No. of Units Held ('000) %of Units Held 5,000 and below % % 5,001-10, % 1, % 10,001-50, % 10, % 50, , % 34, % 500,001 and above % 6, % Total 1, % 53, % 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 and Guidelines on Compliance Function for Fund Management Companies. The soft commission received include research materials, advisory services, market data feed and analyses, data and quotation services, investment related publications and industry benchmarking agencies 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 For The Financial Year Ended 30 September 2016 TO THE UNIT HOLDERS OF TA COMET FUND We, CIMB COMMERCE TRUSTEE BERHAD ("the Trustee"), being the Trustee of TA COMET FUND ("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 and the Trustee under the Deeds, 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 during the financial year ended 30 September 2016; Valuation/pricing of unit of the Fund has been carried out in accordance with the Deeds and relevant regulatory requirements; Creation and cancellation of units have been carried out in accordance with the Deeds 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 25 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 14 to 49, are drawn up so as to give a true and fair view of the financial position of as at 30 September 2016 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 25 November

13 Independent auditors' report to the unitholders of (Established in Malaysia) Report on the Financial Statements We have audited the financial statements of, which comprise the statement of financial position as at 30 September 2016, and the statements of comprehensive income, changes in equity and cash flows for the financial year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 14 to 49. Manager's and Trustee's Responsibility for the Financial Statements The Manager of the Fund is responsible for the preparation of financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards. The Manager is also responsible for such internal control as the Manager determines is necessary to enable the preparation of financial statements 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 these financial statements. Auditors' Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Fund s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Manager, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 12

14 Independent auditors' report to the unitholders of TA Comet Fund (Established in Malaysia) (continued) Opinion In our opinion, the financial statements give a true and fair view of the financial position of the Fund as of 30 September 2016 and of its financial performance and cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards. Other Matters 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 Firm Number: AF 0758 Chartered Accountants Chua See Guan Approval Number: 3169/02/17(J) Chartered Accountant Petaling Jaya, Selangor 25 November

15 Statement Of Comprehensive Income For The Financial Year Ended 30 September Note RM RM INCOME Dividend income 460, ,911 Interest income 67, ,707 Net unrealised (loss)/gain on foreign exchange (228,577) 700,544 Net gain/(loss) on financial assets at fair value through profit or loss ("FVTPL") 6 636,240 (1,293,790) 936, ,372 EXPENSES Manager's fee 3 317, ,569 Trustee's fee 4 35,000 35,000 Auditors' remuneration 8,500 8,500 Tax agent's fee 3,750 2,300 Investment committee's remuneration 7,000 7,200 Brokerage and other transaction fees 270, ,559 Administrative fees and expenses 25,469 17, , ,745 Net income/(loss) before tax 268,360 (308,373) Less: Income tax 5 2,864 (4,607) Net income/(loss) after tax, representing total comprehensive income for the financial year 271,224 (312,980) Net income/(loss) after tax is made up of the following: Net realised (loss)/gain 13(b) (1,403,874) 2,663,840 Net unrealised gain/(loss) 13(c) 1,675,098 (2,976,820) 271,224 (312,980) Distribution for the financial year: Net distribution 1,796,404 1,747,310 Gross/net distribution per unit (sen) The accompanying notes form an integral part of the financial statements. 14

16 Statement Of Financial Position As At 30 September Note RM RM ASSETS Investments 6 15,513,712 13,973,847 Deposit with a financial institution 7 1,652,859 1,287,996 Dividend receivable 59,707 24,383 Interest receivable Amount due from futures brokers 8 21,268 21,268 Amount due from stockbrokers 9 264,913 - Amount due from the Manager 10 5, Tax recoverable 11 18,386 57,619 Cash at banks 2,820,544 5,416,260 TOTAL ASSETS 20,356,688 20,781,686 LIABILITIES Amount due to the Manager 10 27,434 34,243 Amount due to Trustee 3,088 2,038 Other payables and accruals 12,400 14,630 Distribution payable , ,290 TOTAL LIABILITIES 576,346 1,037,201 EQUITY Unitholders' capital 13(a) 14,057,786 11,766,011 Retained earnings 13(b),(c) 5,722,556 7,978,474 NET ASSET VALUE ("NAV") ATTRIBUTABLE TO UNITHOLDERS 19,780,342 19,744,485 TOTAL EQUITY AND LIABILITIES 20,356,688 20,781,686 NUMBER OF UNITS IN CIRCULATION 13(a) 53,342,369 49,314,481 NAV PER UNIT The accompanying notes form an integral part of the financial statements. 15

17 Statement Of Changes In Equity For The Financial Year Ended 30 September 2016 Retained Unitholders' earnings capital Note 13(b) Total Note 13(a) and (c) NAV RM RM RM At 1 October ,796,023 10,762,207 23,558,230 Total comprehensive expense for the financial year - (312,980) (312,980) Creation of units 266, ,331 Reinvestment of units 2,539,213-2,539,213 Cancellation of units (4,558,999) - (4,558,999) Distribution (Note 12) 723,443 (2,470,753) (1,747,310) At 30 September ,766,011 7,978,474 19,744,485 At 1 October ,766,011 7,978,474 19,744,485 Total comprehensive income for the financial year - 271, ,224 Creation of units 781, ,180 Reinvestment of units 2,168,547-2,168,547 Cancellation of units (1,388,690) - (1,388,690) Distribution (Note 12) 730,738 (2,527,142) (1,796,404) At 30 September ,057,786 5,722,556 19,780,342 The accompanying notes form an integral part of the financial statements. 16

18 Statement Of Cash Flows For The Financial Year Ended 30 September 2016 CASH FLOWS FROM OPERATING AND INVESTING ACTIVITIES RM RM Proceeds from sales of investments 28,699,932 28,049,285 Purchases of investments (30,097,047) (24,007,515) Dividend received 425, ,713 Interest received 67, ,798 Tax refunded 61,369 - Manager's fee paid (317,019) (342,021) Trustee's fee paid (37,104) (35,875) Payments for other fees and expenses (314,707) (180,796) Cash (used in)/generated from operating and investing activities (1,511,474) 4,432,589 Tax paid (19,272) (4,607) Net cash (used in)/generated from operating and investing activities (1,530,746) 4,427,982 CASH FLOWS FROM FINANCING ACTIVITIES Cash received from units created 776,214 2,034,395 Cash paid on units cancelled (1,395,598) (4,551,241) Cash distribution paid (80,723) (94,285) Net cash used in financing activities (700,107) (2,611,131) NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (2,230,853) 1,816,851 CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE FINANCIAL YEAR 6,704,256 4,887,405 CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR 4,473,403 6,704,256 CASH AND CASH EQUIVALENTS COMPRISE: Cash at banks 2,820,544 5,416,260 Deposit with financial institution 1,652,859 1,287,996 Cash and cash equivalents 4,473,403 6,704,256 The accompanying notes form an integral part of the financial statements. 17

19 Notes To The Financial Statements - 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 Manager's principal activities 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 25 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: 18

20 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 2016 MFRS 14, Regulatory Deferral Accounts Amendments to MFRS 5, Non-current Assets Held for Sale and Discontinued Operations (Annual Improvements Cycle) Amendments to MFRS 7, Financial Instruments: Disclosures (Annual Improvements Cycle) Amendments to MFRS 10, Consolidated Financial Statements, MFRS 12, Disclosure of Interests in Other Entities and MFRS 128, Investments in Associates and Joint Ventures Investment Entities: Applying the Consolidation Exception Amendments to MFRS 11, Joint Arrangements Accounting for Acquisitions of Interests in Joint Operations Amendments to MFRS 101, Presentation of Financial Statements Disclosure Initiative Amendments to MFRS 116, Property, Plant and Equipment and MFRS 138, Intangible Assets Clarification of Acceptable Methods of Depreciation and Amortisation Amendments to MFRS 116, Property, Plant and Equipment and MFRS 141, Agriculture Agriculture: Bearer Plants Amendments to MFRS 119, Employee Benefits (Annual Improvements Cycle) Amendments to MFRS 127, Separate Financial Statements Equity Method in Separate Financial Statements Amendments to MFRS 134, Interim Financial Reporting (Annual Improvements Cycle) MFRSs, Interpretations and Amendments effective for annual periods beginning on or after 1 January 2017 Amendments to MFRS 107, Statement of Cash Flows - Disclosure Initiative Amendments to MFRS 112, Income Taxes - Recognition of Deferral Tax Assets for Unrealised Losses 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 MFRSs, Interpretations and Amendments effective for annual periods beginning on or after 1 January 2019 MFRS 16, Leases 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 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 adopt the above pronouncements when they become effective in the respective financial year. These pronouncements are not expected to have any significant impact to the financial statements of the Fund upon their initial application except as described below: MFRS 9: Financial Instruments MFRS 9 replaces MFRS 139, Financial Instruments: Recognition and Measurement on the following requirements: classification and measurement of financial assets and financial liabilities as defined in MFRS 139, impairment methodology and hedge accounting. The Fund is in the process of making an assessment of the impact of this Standard. (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. 2.2 Significant Accounting Policies (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. 20

22 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) 2.2 Significant Accounting Policies (contd.) (a) Financial Assets (contd.) 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 loans and receivables. (i) Financial assets at FVTPL Financial assets are classified as financial assets at FVTPL if they are held for trading or are designated as such upon initial recognition. Financial assets held for trading include quoted equity securities and quoted collective investment schemes acquired principally for the purpose of selling in the near term. Subsequent to initial recognition, financial assets at FVTPL are measured at fair value. Changes in the fair value of those financial instruments are recorded in "Net gain or loss on financial assets at FVTPL". Dividend revenue and interest earned elements of such instruments are recorded separately in 'Dividend income' and 'Interest income', respectively. Exchange differences on financial assets at FVTPL are not recognised separately in profit or loss but are included in net gains or net losses on changes in fair value of financial assets at FVTPL. (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, receivables are measured at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when the receivables are derecognised or impaired, and through the amortisation process. (b) Impairment of Financial Assets The Fund assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. 21

23 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) 2.2 Significant Accounting Policies (contd.) (b) Impairment of Financial Assets (contd.) Receivables and other financial assets carried at amortised cost To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Fund considers factors such as the probability of insolvency or significant financial difficulties of the receivable and default or significant delay in payments. If any such evidence exists, the amount of impairment loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the financial asset's original effective interest rate. The impairment loss is recognised in profit or loss. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of receivables, where the carrying amount is reduced through the use of an allowance account. When a receivable becomes uncollectible, it is written off against the allowance account. If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss. (c) 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. Realised gains and losses on disposals of financial instruments classified as part of 'at FVTPL' are calculated using weighted average method. They represent the difference between an instrument's initial carrying amount and disposal amount. (d) 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, 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. 22

24 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) 2.2 Significant Accounting Policies (contd.) (d) Financial Liabilities (contd.) 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, and through the amortisation process. (e) Foreign Currency (i) Functional and presentation currency 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 RM, which is also the Fund's functional currency. (ii) Foreign currency transactions Transactions in foreign currencies are measured in the functional currency of the Fund and are recorded on initial recognition in the functional currency at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the reporting date. Non-monetary items denominated in foreign currencies measured at fair value are translated using the exchange rates at the date when the fair value was determined. Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting date are recognised in profit or loss. Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the year except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in other comprehensive income or equity. Exchange differences arising from such non-monetary items are also recognised directly in other comprehensive income or equity. (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. 23

25 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 liability in the period in which it is approved. (h) Cash and Cash Equivalents Cash and cash equivalents comprise cash at bank and short-term deposit with financial institution that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. (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. (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 to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. 24

26 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) 2.2 Significant Accounting Policies (contd.) (k) Segment Reporting For management purposes, the Fund is managed by two main portfolios, namely equity securities 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. The Manager classifies its quoted equity securities and quoted collective investment schemes as financial assets 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 1.5% (2015: 1.5%) 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% (2015: 0.10%) per annum of the NAV of the Fund, subject to a minimum of RM35,000 (2015: RM35,000) per annum. 25

27 5. INCOME TAX EXPENSE RM RM Tax expense for the financial year - Foreign tax 886 4,607 Overprovision in prior years (3,750) - (2,864) 4,607 Domestic income tax is calculated at the Malaysian statutory tax rate of 24% (2015: 25%) 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 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/(loss) before tax at the statutory income tax rate to income tax expense at the effective income tax rate of the Fund is as follows: RM RM Net income/(loss) before tax 268,360 (308,373) Taxation at Malaysian statutory rate of 24% (2015: 25%) 64,406 (77,093) Effects of tax withheld on income from other countries (1,239) (6,911) Effects of dividend income, interest income on deposit and other income not subject to tax (581,583) (806,280) Effects of expenses not deductible for tax purposes 441, ,124 Overprovision in prior years (3,750) - Restriction on tax deductible expenses for unit trust funds 78,148 86,767 Income tax for the financial year (2,864) 4, INVESTMENTS RM RM Financial assets at FVTPL: Quoted equity securities in Malaysia 13,142,104 10,718,408 Quoted equity securities outside Malaysia 2,065,426 1,889,851 Quoted derivative instrument in Malaysia - 44,730 Quoted collective investment scheme in Malaysia 306, ,017 Quoted collective investment scheme outside Malaysia - 1,048,841 15,513,712 13,973,847 26

28 6. INVESTMENTS (CONTD.) RM RM Net gain/(loss) on financial assets at FVTPL comprises: Net realised (loss)/gain on disposals (1,267,435) 2,383,574 Net unrealised gain/(loss) on changes in fair value 1,903,675 (3,677,364) 636,240 (1,293,790) Financial assets at FVTPL as at 30 September 2016 are as detailed below: (a) Quoted equity securities in Malaysia Name of Counter Quantity Cost Fair Value % of NAV Unit RM RM % Consumer Product Fraser & Neave Holdings Bhd 16, , , Financial Services CIMB Group Holdings Bhd 122, , , Malayan Banking Bhd 198,267 1,650,433 1,487, Public Bank Bhd 63,700 1,161,870 1,262, RHB Bank Bhd 93, , , ,996 3,946,449 3,761, Industrial Products DRB-Hicom Bhd 410, , , Goodway Integrated Industries Bhd 250, , , Petronas Chemicals Group Bhd 75, , , Salutica Bhd 183, , , ,600 1,386,703 1,504, Infrastructure Digi.Com Bhd 41, , , Plantation IOI Corporation Bhd 149, , , Properties Gabungan AQRS Bhd 531, , , KSL Holdings Bhd 180, , , S P Setia Bhd 130, , , ,000 1,170,202 1,151,

29 6. INVESTMENTS (CONTD.) (a) Quoted equity securities in Malaysia (Contd.) Name of Counter Quantity Cost Fair Value % of NAV Unit RM RM % Trading/Services AirAsia Bhd 60, , , Axiata Group Bhd 114, , , Berjaya Food Bhd 190, , , Genting Bhd 81, , , Hap Seng Consolidated Bhd 30, , , IHH Healthcare Bhd 90, , , Maxis Bhd 61, , , SapuraKencana Petroleum Bhd 147, , , Sime Darby Bhd 85, , , Tenaga Nasional Bhd 114,900 1,273,014 1,643, ,859 5,241,718 5,469, Total Quoted Equity Securities in Malaysia 3,418,955 13,112,436 13,142, (b) Quoted equity securities outside Malaysia Name of Counter Quantity Cost Fair Value % of NAV Unit RM RM % Australia Energy Whitehaven Coal Ltd 70, , , Mining Mount Gibson Iron Ltd 330, , , Hong Kong Consumer Product Tongda Group Holdings Ltd 350, , , Finance Hong Kong Exchanges and Clearing Ltd 2, , ,

30 6. INVESTMENTS (CONTD.) (b) Quoted equity securities outside Malaysia (Contd.) Name of Counter Quantity Cost Fair Value % of NAV Unit RM RM % Properties CK Hutchison Holdings Ltd 5, , , New World Development Co Ltd 60, , , , , , Indonesia Finance Bank CIMB Niaga TBK Total Quoted Equity Securities outside Malaysia 818,019 1,997,515 2,065, (c) Quoted 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* 536, , , * A fund managed by the Manager Total Quoted Collective Investment Scheme in Malaysia 536, , , TOTAL FINANCIAL ASSETS AT FVTPL 4,773,948 15,382,428 15,513, EXCESS OF FAIR VALUE OVER COST 131,284 29

31 7. DEPOSIT WITH A FINANCIAL INSTITUTION RM RM This is a short-term placement with: - Licensed bank 1,652, Licensed investment bank - 1,287,996 1,652,859 1,287,996 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: Average Remaining 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 FROM STOCKBROKERS Amount due from 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 (2015: 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 RM4,413 (2015: RM200) and rebate of Manager's fee of RM753 (2015: RM622) 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 RM850 (2015: RM7,758) and accruals for Manager's fee of RM26,584 (2015: RM27,107) at the end of the financial year. The normal credit term for creation/cancellation of units is 10 days (2015: 10 days) and the normal credit term for Manager's fee is 30 days (2015: 30 days). 30

32 11. TAX RECOVERABLE RM RM At beginning of the financial year 57,619 57,619 Refunded during the financial year (61,369) - Overprovision in prior years 3,750 - Income tax expense for the financial year 18,386 - At end of the financial year 18,386 57, DISTRIBUTION Distribution to unitholders declared on 30 September 2016 and 31 March 2016 (declared on 30 September 2015 and 07 April 2015 in the previous financial year) are made from the following sources: RM RM Dividend income 460, ,887 Interest income 67, ,036 Net realised (loss)/gain on sales of investments (1,538,347) 2,139,425 Previous years' realised gains 3,933,880-2,923,979 2,996,348 Less: Expenses (396,837) (525,595) Distribution out of realised reserve (Note 13(b)) 2,527,142 2,470,753 Distribution equalisation (Note 13(a)) (730,738) (723,443) Distribution for the financial year 1,796,404 1,747,310 Analysed as: Cash distribution 66,092 57,221 Reinvestment of units 1,730,312 1,690,089 Distribution payable 1,796,404 1,747,310 Units in circulation: Interim distribution 31 March 2016/07 April ,519,212 50,734,654 Final distribution 30 September 2016/ ,342,369 49,314,481 Interim distribution: Gross/Net distribution per unit (sen) Final distribution: Gross/Net distribution per unit (sen) Included in the above distribution was a gross amount of RM3,933,880 (2015: Nil) from the previous financial years' realised reserve. 31

33 13. NET ASSET VALUE ATTRIBUTABLE TO UNITHOLDERS Note RM RM Unitholders' capital (a) 14,057,786 11,766,011 Retained earnings - Realised reserve (distributable) (b) 5,205,305 9,136,321 - Unrealised reserve (non-distributable) (c) 517,251 (1,157,847) 19,780,342 19,744,485 (a) Unitholders' capital No of units RM No of units RM At beginning of the financial year 49,314,481 11,766,011 53,499,385 12,796,023 Creation of units 2,038, , , ,331 Reinvestment of units 5,598,793 2,168,547 5,807,837 2,539,213 Cancellation of units (3,608,976) (1,388,690) (10,614,591) (4,558,999) 53,342,369 13,327,048 49,314,481 11,042,568 Distribution (Note 12) - 730, ,443 At end of the financial year 53,342,369 14,057,786 49,314,481 11,766,011 (b) Realised reserve - Distributable RM RM At beginning of the financial year 9,136,321 8,943,234 Net realised (loss)/income for the financial year (1,403,874) 2,663,840 Distribution out of realised reserve (Note 12) (2,527,142) (2,470,753) Net (decrease)/increase in realised retained earnings for the financial year (3,931,016) 193,087 At end of the financial year 5,205,305 9,136,321 (c) Unrealised reserve - Non-distributable RM RM At beginning of the financial year (1,157,847) 1,818,973 Net unrealised gain/(loss) for the financial year 1,675,098 (2,976,820) At end of the financial year 517,251 (1,157,847) 32

34 14. 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. A reconciliation of NAV attributable to unitholders for issuing/redeeming units at 30 September 2016/2015 and the NAV attributable to unitholders per the financial statements is as follows: RM RM/Unit RM RM/Unit NAV attributable to unitholders for issuance/ redemption of units 19,804, ,839, Effect from adopting bid prices as fair value (24,195) (0.0005) (94,696) (0.0019) Shortfall of minimum Trustee's fee yet to be charged - - (231) - NAV attributable to unitholders as disclosed in the financial statements 19,780, ,744, UNITS HELD BY RELATED PARTY No. of units Valued at No. of units Valued at NAV NAV Key management of the RM RM Manager's ultimate holding company 68,019 25, , ,426 As at 30 September 2016, the units were held legally by the above related party. The value of holdings by the related party was calculated based on the unadjusted NAV per unit of RM (2015: RM0.4023). 33

35 16. 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* 25,400, , Public Investment Bank Bhd 16,681, , JF Apex Securities Bhd 3,747, , Affin Investment Bank Bhd 3,262, , CIMB Investment Bank Bhd 3,178, , RHB Investment Bank Bhd 1,927, , Maybank Investment Bank Bhd 1,443, , Hong Leong Investment Bank Bhd 745, , Alliance Investment Bank Bhd 525, , Others 1,383, , ,296, , * Immediate holding company to the Manager. The directors of the Manager are of the opinion that the dealings with the immediate holding company to the Manager have been transacted at an arm's length basis. 17. MANAGEMENT EXPENSE AND PORTFOLIO TURNOVER RATIOS (a) Management Expense Ratio The management expense ratio for the financial year ended 30 September 2016 is 1.99% (2015: 1.86%). 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 2016 is 1.44 times (2015: 1.10 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. 34

36 18. 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 Guidelines of the Fund. 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 higher capital appreciation by investing in the instruments that have the potential of substantial value appreciation over the medium to long period. There have been no changes in reportable segments in the current financial year. The segment information is presented below: Money Money Investment market Investment market portfolio portfolio Total portfolio portfolio Total RM RM RM RM RM RM Dividend income 460, , , ,911 Interest income - 67,630 67, , ,707 Net unrealised (loss)/gain on foreign exchange (228,577) - (228,577) 700, ,544 Net gain/(loss) on: financial assets at FVTPL 636, ,240 (1,293,790) - (1,293,790) Total segment operating income/(loss) for the financial year 868,479 67, ,109 (2,335) 296, ,372 Investments 15,513,712-15,513,712 13,973,847-13,973,847 Deposit with a financial institution - 1,652,859 1,652,859-1,287,996 1,287,996 Other assets 59, ,840 24, ,496 Total segment assets 15,573,419 1,652,992 17,226,411 13,998,230 1,288,109 15,286,339 Other liabilities Total segment liabilities There was no transaction between operating segments during the financial year. 35

37 18. 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/(loss): RM RM Net reportable segment operating income 936, ,372 Expenses (667,749) (602,745) Net Income/(loss) before tax 268,360 (308,373) Income tax expense 2,864 (4,607) Net income/(loss) after tax 271,224 (312,980) 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 17,226,411 15,286,339 Amount due from futures brokers 21,268 21,268 Amount due from stockbrokers 264,913 - Amount due from the Manager 5, Tax recoverable 18,386 57,619 Cash at banks 2,820,544 5,416,260 Total assets of the Fund 20,356,688 20,781,686 Total segment liabilities - - Amount due to the Manager 27,434 34,243 Amount due to Trustee 3,088 2,038 Other payables and accruals 12,400 14,630 Distribution payable 533, ,290 Total liabilities of the Fund 576,346 1,037, 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. 36

38 19. FINANCIAL INSTRUMENTS (CONTD.) (a) Classification of financial instruments (Contd.) 2016 Financial Financial Receivables liabilities at assets at at amortised amortised FVTPL cost cost Total RM RM RM RM Assets Investments 15,513, ,513,712 Deposit with a financial institution - 1,652,859-1,652,859 Dividend receivable - 59,707-59,707 Interest receivable Amount due from futures brokers - 21,268-21,268 Amount due from stockbrokers - 264, ,913 Amount due from the Manager - 5,166 5,166 Cash at banks - 2,820,544-2,820,544 Total financial assets 15,513,712 4,824,590-20,338,302 Other asset 18,386 Total non-financial asset 20,356,688 Liabilities Amount due to the Manager ,434 27,434 Amount due to Trustee - - 3,088 3,088 Other payables and accruals ,400 12,400 Distribution payable , ,424 Total financial liabilities , ,346 Income, expenses, gains and losses Dividend income 460, ,816 Interest income - 67,630-67,630 Net unrealised loss on foreign exchange (228,577) - - (228,577) Net gain on financial assets at FVTPL 636, ,240 37

39 19. FINANCIAL INSTRUMENTS (CONTD.) (a) Classification of financial instruments (Contd.) 2015 Financial Financial Receivables liabilities at assets at at amortised amortised FVTPL cost cost Total RM RM RM RM Assets Investments 13,973, ,973,847 Deposit with a financial institution - 1,287,996-1,287,996 Dividend receivable - 24,383-24,383 Interest receivable Amount due from futures brokers - 21,268-21,268 Amount due from the Manager Cash at banks - 5,416,260-5,416,260 Total financial assets 13,973,847 6,750,220-20,724,067 Other asset 57,619 Total non-financial asset 20,781,686 Liabilities Amount due to the Manager ,243 34,243 Amount due to Trustee - - 2,038 2,038 Other payables and accruals ,630 14,630 Distribution payable , ,290 Total financial liabilities - - 1,037,201 1,037,201 Income, expenses, gains and losses Dividend income 590, ,911 Interest income - 296, ,707 Net unrealised gain on foreign exchange 700, ,544 Net loss on financial assets at FVTPL (1,293,790) - - (1,293,790) 38

40 19. FINANCIAL INSTRUMENTS (CONTD.) (b) Financial instruments that are carried at fair value (c) 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. 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. 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. - Deposit with a financial institution - Dividend receivable - Interest receivable - Amount due from futures brokers - Amount due from/(to) stockbrokers - Amount due from/(to) the Manager - Cash at banks - Amount due to Trustee - Other payables and accruals - Distribution payable (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: 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). Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs). 39

41 19. FINANCIAL INSTRUMENTS (CONTD.) (d) Fair value hierarchy (contd.) Financial assets at Level 1 Level 2 Level 3 Total FVTPL: RM RM RM RM 2016 Quoted equity securities in Malaysia 13,142, ,142,104 Quoted equity securities outside Malaysia 2,065, ,065,426 Quoted collective investment scheme in Malaysia - 306, ,182 15,207, ,182-15,513, Quoted equity securities in Malaysia 10,718, ,718,408 Quoted equity securities outside Malaysia 1,889, ,889,851 Quoted derivative instrument in Malaysia 44, ,730 Quoted collective investment scheme in Malaysia - 272, ,017 Quoted collective investment scheme outside Malaysia - 1,048,841-1,048,841 12,652,989 1,320,858-13,973, 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. 40

42 20. FINANCIAL RISKS AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) (a) Introduction (Contd.) The Fund's objective in managing risks is the creation and protection of unitholders' value. Risks 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 Risk monitoring and managing mechanism are primarily set up and 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 (e) Excessive risk concentration Risk concentration indicates the relative exposure of the Fund's performance to developments affecting a particular industry or geographical location. Concentration 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. Concentration 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. 41

43 20. FINANCIAL RISKS AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) (e) Excessive risk concentration (Contd.) 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 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 institution 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. 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 fixed rate investments at the end of the reporting period. Sensitivity of Sensitivity changes in Changes of interest fair value of in basis income investment points * RM RM * the assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment. 42

44 20. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) (f) Market risk (Contd.) (i) Interest rate risk (Contd.) 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 re-pricing or maturity dates Non-exposure to interest 0-3 rate months movement Total WAEIR RM RM RM % Assets Investments - 15,513,712 15,513,712 Deposit with a financial institution 1,652,859-1,652, Other assets - 3,190,117 3,190,117 Total assets 1,652,859 18,703,829 20,356,688 Liabilities Other liabilities - 576, ,346 Total liabilities - 576, ,346 Total interest sensitivity gap 1,652,859 18,127,483 19,780, Assets Investments - 13,973,847 13,973,847 Deposit with a financial institution 1,287,996-1,287, Other assets - 5,519,843 5,519,843 Total assets 1,287,996 19,493,690 20,781,686 Liabilities Other liabilities - 1,037,201 1,037,201 Total liabilities - 1,037,201 1,037,201 Total interest sensitivity gap 1,287,996 18,456,489 19,744,485 43

45 20. FINANCIAL RISKS 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 and quoted collective investment scheme. 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: Change in Effect Effect Market Indices equity indices on income on equity 2016 % RM RM FTSE Bursa Malaysia Top 100 Index ,034 +4,034 Hang Seng Index Australia Stock Exchange FTSE Bursa Malaysia Top 100 Index , ,590 Hang Seng Index , ,037 Australia Stock Exchange ,102 +1,102 FTSE Straits Times Index London Stock Exchange ,825 +4,825 An opposite movement in the indices shown above would have resulted in an equivalent, but opposite, impact to the profit or loss and equity. In practice, the actual trading results may differ from the sensitivity analysis above and the difference could be material. 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 13,448, ,035, Hong Kong 1,227, ,491, Australia 838, , Singapore , United Kingdom - - 1,048, Indonesia ,513, ,973,

46 20. FINANCIAL RISKS AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) (f) Market risk (contd.) (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 equity instruments and money market 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 and Exchange rates 30 September currency rates income NAV RM % RM RM 2016 AUD/RM HKD/RM ,222 +1,222 IDR/RM SGD/RM GBP/RM USD/RM HKD/RM , ,989 AUD/RM SGD/RM ,809 +4,809 GBP/RM ,036 +3,036 USD/RM ,561 +1,561 An opposite movement in each of the exchange rates shown above would have resulted in an equivalent, but opposite, impact. 45

47 20. FINANCIAL RISKS AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) (f) Market risk (contd.) (iii) Currency risk (contd.) Currency risk exposure 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 1,096, , HKD/RM 3,054, ,270, IDR/RM 5, SGD/RM 7, ,118, GBP/RM 1, ,379, USD/RM 2, , (g) Credit risk Credit risk is the risk that the counterparty to a financial instrument will cause a financial loss to 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. 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. 46

48 20. FINANCIAL RISKS AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) (g) Credit risk (Contd.) 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 2016 Deposit with a financial institution 1,652,859-1,652,859 Dividend receivable - 59,707 59,707 Interest receivable Amount due from futures brokers - 21,268 21,268 Amount due from stockbroker - 264, ,913 Amount due from the Manager - 5,166 5,166 Cash at banks 2,820,544-2,820,544 4,473, ,054 4,824, Deposit with a financial institution - 1,287,996 1,287,996 Dividend receivable - 24,383 24,383 Interest receivable Amount due from futures brokers - 21,268 21,268 Amount due from the Manager Cash at banks 5,416,260-5,416,260 5,416,260 1,333,960 6,750,220 (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. 47

49 20. FINANCIAL RISKS AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) (h) Liquidity risk (Contd.) 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 2016 RM RM Assets Investments 15,513,712 15,513,712 Deposit with a financial institution 1,652,859 1,652,859 Other assets 3,190,117 3,190,117 Total undiscounted financial assets 20,356,688 20,356,688 Liabilities Other liabilities 576, ,346 Total undiscounted financial liabilities 576, ,346 Unitholders' capital 19,780,342 19,780,342 Liquidity gap Assets Investments 13,973,847 13,973,847 Deposit with a financial institution 1,287,996 1,287,996 Other assets 5,519,843 5,519,843 Total undiscounted financial assets 20,781,686 20,781,686 Liabilities Other liabilities 1,037,201 1,037,201 Total undiscounted financial liabilities 1,037,201 1,037,201 Unitholders' capital 19,744,485 19,744,485 Liquidity gap

50 20. FINANCIAL RISKS AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) (h) Liquidity risk (Contd.) 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. (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. 21. 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 2016 and 30 September

51 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 Choo Swee Kee (Non-Independent) Mohammed A'reeff Bin Abdul Khalid (Non-Independent) Dr. Wong Hong Meng (Independent) Christopher Koh Swee Kiat (Independent) Choo Swee Kee (Non-Independent) Kaladher A/L Govindan (Non-Independent) Tay Kian Chuan (Independent) Dr. Wong Hong Meng (Independent) CIMB Commerce Trustee Berhad 17 th Floor, Menara CIMB Jalan Stesen Sentral 2 Kuala Lumpur Sentral Kuala Lumpur KPMG 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 ) 50

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

53 HEADOFFICE KOTAKINABALU KUCHING MIRI PENANG MELAKA 23rdFloor,MenaraTAOne,22JalanP.Ramlee 50250KualaLumpur Tel:(603) Fax:(603) Unit4-1-02,1stFloor,Block4Api-ApiCentre JalanCentrePoint,88000KotaKinabalu,Sabah Tel:(088) (088) Fax:(088) L204,1stFloor,JalanTunkuAbdulRahman 93100Kuching,Sarawak Tel:(082) Fax:(082) Lot1251,1stFloor Block10,MiriConcesionLandDistrict CentrepointCommercialCentre JalanMelayu 98000Miri,Sarawak Tel:(085) Fax:(085) ,BayanPoint MedanKampungRelau 11900PulauPinang Tel:(04) Fax:(04) A,JalanMerdeka TamanMelakaRaya 75000Melaka Tel: /3052 Fax: