AMB VALUE TRUST FUND INTERIM REPORT. For the Six-Month Period Ended 28 February Manager s Report Trustee s Report 28

Transcription

1 AMB VALUE TRUST FUND INTERIM REPORT For the Six-Month Period Ended 28 February 2018 Contents Page Manager s Report 2-27 Trustee s Report 28 Statement by Manager 29 Auditors Report Statement of Comprehensive Income 34 Statement of Financial Position Statement of Changes in Equity Statement of Cash Flows 39 Notes to the Financial Statements Corporate Information 65 1

2 MANAGER S REPORT AMB VALUE TRUST FUND Dear Unit Holders, Amanah Mutual Berhad (AMB), as the Manager of AMB Value Trust Fund ( AMBVTF or Fund ), is pleased to present the Manager s Report of AMBVTF for the six-month period ended 28 February CATEGORY / TYPE Equity Fund / Growth Fund 2. INVESTMENT OBJECTIVE The investment objective of AMBVTF is to provide investors with capital growth through investments into securities that are trading at a discount to their intrinsic value, while minimising the risk in the medium to long-term. 3. ASSET ALLOCATION 70% - 98% in equities 2% - 30% in cash or bonds (or a combination of both). The Fund may invest up to 25% of its NAV in Asia Pacific markets. The Fund may also invest in stocks that derive the majority of their revenue from the Asia Pacific markets. 4. PERFORMANCE BENCHMARK FTSE Bursa Malaysia KLCI (FBM KLCI) 2

3 5. CLASSES OF UNITS AMBVTF offers investments in multiple classes of units. During the period under review, seven (7) classes of units of AMBVTF were offered to investors. Details of the classes are as follows: No. Class Currency Denomination 1. A-MYR MYR (Malaysian Ringgit) 2. A-JPY JPY (Japanese Yen) 3. B-SGD SGD (Singapore Dollar) 4. C-MYR MYR (Malaysian Ringgit) 5. B-USD 6. C-USD USD (United States Dollar) USD (United States Dollar) Category of Investors Retail Retail Retail Institutional Retail Institutional Distribution Policy Distribution of income Distribution of income Accumulation of Units Distribution of income Accumulation of Units Distribution of income JPY Accumulation 7. B-JPY Retail (Japanese Yen) of Units Note: Assets from all classes are pooled and invested as a single Fund. Country Availability Malaysia, Singapore Malaysia, Japan Malaysia, Singapore Malaysia Malaysia Malaysia Malaysia, Japan 6. LAUNCH DATE AND COMMENCEMENT DATE OF THE CLASSES Class Launch Date Commencement Date A-MYR 7 January January 2003 A-JPY 19 November December 2012 B-SGD 9 January January 2013 C-MYR 21 August September 2013 B-USD 21 August September 2013 C-USD 21 August September 2013 B-JPY 13 September October

4 7. FUND DISTRIBUTION POLICY 7.1 Income distribution For Classes A-MYR, A-JPY, C-MYR and C-USD, income distribution, if any, is declared at the end of the financial year of the Fund or for any specified period, as may be determined by the Manager in consultation with the Trustee. Any distribution will be at the discretion of the Manager, and is incidental to carrying out the investment function in accordance with the objective and investment strategy of the Fund. The distribution of the Fund will vary depending on its performance and prevailing economic conditions. 7.2 Accumulation of Units For Classes B-SGD, B-USD and B-JPY, there will be no income distributions made to the Unit Holder. However, the value of the Unit Holder s investment may increase as reflected in the increase in the NAV per Unit (subject to the performance of the Fund). 8. UNITHOLDING STATISTICS 28 February 2018, the total unit holders for the Fund are 8,730 and the total units in circulation are 1,222,761,485. Below is the unit holdings statistics by classes. 8.1 Class A-MYR Size of Holdings No. of Unit Holders No. of Units Held No. % Units % 5,000 and below ,555, ,001 to 10, ,535, ,001 to 50,000 4, ,567, ,001 to 500,000 2, ,523, ,001 and above ,519, TOTAL # 8, *768,701, * Excludes units kept by the Manager. # Includes two unit holders, United Overseas Bank (Malaysia) Bhd and ifast Capital Sdn Bhd. as our institutional unit trust agents with 3,800 and 76 investors, respectively. 8.2 Class A-JPY 28 February 2018, 200 units held by the Manager. 4

5 8.3 Class B-SGD Size of Holdings No. of Unit Holders No. of Units Held No. % Units % 5,000 and below Nil Nil Nil Nil 5,001 to 10, , ,001 to 50,000 Nil Nil Nil Nil 50,001 to 500,000 Nil Nil Nil Nil 500,001 and above Nil Nil Nil Nil TOTAL *15, * Excludes units kept by the Manager. 8.4 Class C-MYR No. of Unit Holders No. of Units Held Size of Holdings No. % Units % 5,000 and below Nil Nil Nil Nil 5,001 to 10,000 Nil Nil Nil Nil 10,001 to 50,000 Nil Nil Nil Nil 50,001 to 500,000 Nil Nil Nil Nil 500,001 and above ,972, TOTAL *453,972, * Excludes units kept by the Manager. 8.5 Class B-USD Size of Holdings No. of Unit Holders No. of Units Held No. % Units % 5,000 and below , ,001 to 10,000 Nil Nil Nil Nil 10,001 to 50,000 Nil Nil Nil Nil 50,001 to 500,000 Nil Nil Nil Nil 500,001 and above Nil Nil Nil Nil TOTAL *4, * Excludes units kept by the Manager. 8.6 Class C-USD 28 February 2018, 20,500 units held by the Manager. 5

6 8.7 Class B-JPY Size of Holdings No. of Unit Holders No. of Units Held No. % Units % 5,000 and below ,001 to 10,000 Nil Nil Nil Nil 10,001 to 50,000 Nil Nil Nil Nil 50,001 to 500,000 Nil Nil Nil Nil 500,001 and above Nil Nil Nil Nil TOTAL * * Exclude units kept by the Manager. 9. TOTAL NET ASSET VALUE (NAV) 28 February 2018, the total NAV of AMBVTF was MYR435,614,244. The breakdown of the total NAV by classes is as follows: Class NAV (MYR) % A-MYR 259,793, C-MYR 175,376, B-USD 34, C-USD 76, B-SGD 31, A-JPY 92, B-JPY 210, TOTAL NAV 435,614,

7 10. INVESTMENT PORTFOLIO Assets of all classes are pooled and invested as a single Fund in the MYR denominated securities. 28 February 2018, the investment portfolio is as follows: Sector Quoted Equity Securities Local Interim 28/02/18 % 31/08/17 % 31/08/16 % 31/08/15 % Construction Consumer Products Nil 4.96 Finance Industrial Products Infrastructure Nil Nil Nil 2.55 Plantation Properties Nil Nil REITS Technology Nil Trading/Services Warrants Preference shares 0.29 Nil Nil Nil Foreign Plantation 2.07 Nil Nil Nil Finance 6.12 Nil Nil Nil Property 4.17 Nil Nil Nil Construction 2.17 Nil Nil Nil Total Quoted Equity Securities Cash TOTAL Note: The abovementioned percentages are based on the total NAV of the fund at the end of the financial year in MYR based currency. 7

8 11. PERFORMANCE DATA Returns on the investments are apportioned to the classes based on the ratio of each class assets to the total assets of the Fund. Valuation on assets for each class is calculated in the respective class currency, on daily basis Class A-MYR For Financial Year Total net asset value (NAV) (MYR 000) Interim 28/02/18 31/08/17 31/08/16 31/08/15 259, , , ,871 Units in circulation ( 000) 768, ,110 1,142,980 1,258,650 Unit NAV (MYR) NAV per unit (ex-date) NAV per unit (highest) NAV per unit (lowest) Class A-JPY For Financial Year Interim 28/02/18 31/08/17 31/08/16 31/08/15 Total net asset value (NAV)(MYR) 92,047 88,794 82,088 74,989 Units in circulation Unit NAV (JPY) NAV per unit 12,595 11,211 10,339 10,774 NAV per unit (highest) 13,423 11,450 11,431 14,626 NAV per unit (lowest) 11,177 9,907 9,745 10, Class B-SGD For Financial Year Interim 28/02/18 31/08/17 31/08/16 31/08/15 Total net asset value (NAV)(MYR) 31,156 74, , ,959 Units in circulation 20,000 50,000 75, ,000 Unit NAV (SGD) NAV per unit NAV per unit (highest) NAV per unit (lowest)

9 11.4 Class C-MYR For Financial Year Total net asset value (NAV) (MYR 000) Interim 28/02/18 175,376 31/08/17 31/08/16 31/08/15 157, , ,058 Units in circulation ( 000) 453, , , ,540 Unit NAV (MYR) NAV per unit (ex-date) NAV per unit (highest) NAV per unit (lowest) Class B-USD For Financial Year Interim 28/02/18 31/08/17 31/08/16 31/08/15 Total net asset value(nav)(myr) 34, , ,027 1,377,547 Units in circulation 10, , , ,000 Unit NAV (USD) NAV per unit NAV per unit (highest) NAV per unit (lowest) Class C-USD For Financial Year Interim 28/02/18 31/08/17 31/08/16 31/08/15 Total net asset value(nav)(myr) 76,611 71,864 67,565 61,317 Units in circulation 20,500 20,000 20,000 20,000 Unit NAV (USD) NAV per unit (ex-date) NAV per unit (highest) NAV per unit (lowest)

10 11.7 Class B-JPY For Financial Year Interim 28/02/18 31/08/17 31/08/16 31/08/15 Total net asset value(nav)(myr) 210, ,930 1,473,212 1,455,905 Units in circulation ,400 4,760 Unit NAV (JPY) NAV per unit 10,280 9,151 8,434 8,789 NAV per unit (highest) 10,956 9,345 9,325 11,944 NAV per unit (lowest) 9,123 8,086 7,950 8, PERFORMANCE DATA 12.1 Average Total Return per Annum Period 1 year 3 years 5 years Class A-MYR Average Total Return per Annum (%) Class Class Class B-SGD C-MYR B-USD Class A-JPY Class C-USD Class B-JPY Fund Benchmark* Fund 3.15 (3.16) (0.40) 3.36 (3.30) 0.24 (3.22) Benchmark* 0.64 (5.75 (3.01) 0.64 (2.11) (2.11) (5.75) Fund 4.95 n.a 0.90 n.a n.a n.a n.a Benchmark* 2.54 n.a (0.90) n.a n.a n.a n.a Since Fund (2.75) (0.51) 0.53 commencement Benchmark* (0.90) 1.13 (2.81) (2.81) (1.57) Source: Lipper *Benchmark = FBM KLCI (in respective class currency) Notes: Annualised Return (Average Total Return per Annum) (%) = [{(1+r1) (1+r2)... (1+rn)} 1/n - 1] x 100 Where r = rate of return, n = number of years 10

11 12.2 Annual Total Returns Class A-MYR For Financial Period / Year Interim 28/02/18 31/08/17 31/08/16 31/08/15 31/08/14 31/08/13 Capital return (%) (4.99) (26.47) (5.27) Income return (%) Nil Nil Total return of Class A-MYR (%) (15.48) Total return of benchmark* (%) Source: Lipper *Benchmark = FBM KLCI (13.58) Class A-JPY For Financial Period / Year Interim 28/02/18 31/08/17 31/08/16 31/08/15 Capital return (%) (4.04) (24.33) Income return (%) Nil Nil Nil Nil Total return of Class A-JPY (%) (4.04) (24.33) Total return of benchmark* (%) (8.03) (24.34) Source: Lipper *Benchmark = FBM KLCI (in JPY) Class B-SGD For Financial Period / Year Interim 28/02/18 31/08/17 31/08/16 31/08/15 Capital return (%) (29.00) Income return (%) Nil Nil Nil Nil Total return of Class B-SGD (%) (29.00) Total return of benchmark* (%) (0.01) 4.13 (26.70) Source: Lipper *Benchmark = FBM KLCI (in SGD) 11

12 Class C-MYR For Financial Interim Period / Year 28/02/18 31/08/17 31/08/16 31/08/15 Capital return (%) (3.11) (25.25) Income return (%) Nil Total return of Class C-MYR (%) (15.30) Total return of benchmark* (%) (13.58) Source: Lipper *Benchmark = FBM KLCI Class B-USD For Financial Interim Period / Year 28/02/18 31/08/17 31/08/16 31/08/15 Capital return (%) (36.62) Income return (%) Nil Nil Nil Nil Total return of Class B-USD (%) (36.62) Total return of benchmark* (%) (34.48) Source: Lipper *Benchmark = FBM KLCI (in USD) Class C-USD For Financial Period / Year 12 Interim 28/02/18 31/08/17 31/08/16 31/08/15 Capital return (%) (37.25) Income return (%) Nil 2.39 Nil Nil Total return of Class C-USD (%) Total return of benchmark* (%) Source: Lipper *Benchmark = FBM KLCI (in USD) Class B-JPY For Financial Year (37.25) (34.48) Interim 28/02/18 31/08/17 31/08/16 31/08/15 Capital return (%) (4.04) (24.38) Income return (%) Nil Nil Nil Nil Total return of Class B-JPY (%) (4.04) (24.38) Total return of benchmark* (%) Source: Lipper *Benchmark = FBM KLCI (in JPY) (8.03) (24.34)

13 Note: 1. Capital return (%) = NAV per unit on ex-date NAV per unit at the beginning of the financial year 2. Income return (%) = Gross income distribution declared NAV per unit at the beginning of the financial year -1 x 100 x Total return (%) = Capital Return (%) + Income Return (%) Past performance is not necessarily indicative of future performance and unit prices and investment returns may go down as well as up Income Distribution for the Period During the period under review, no income distribution declared for all classes Class A-MYR For Financial Year Interim 28/02/18 31/08/17 31/08/16 31/08/15 Net income distributed (MYR 000) Nil 18,122 57,149 62,930 Distribution (sen) per unit Gross Nil Net Nil Distribution date n.a 31/08/17 31/08/16 31/08/ Class C-MYR For Financial Year Interim 28/02/18 31/08/17 31/08/16 31/08/15 Net income distributed (MYR 000) Nil 10,631 19,021 16,766 Distribution (sen) per unit Gross Nil Net Nil Distribution date n.a 31/08/17 31/08/16 31/08/15 13

14 Class C-USD For Financial Year Interim 28/02/ /08/2017 Net income distributed (MYR 000) Nil 1,702 Distribution (cent) per unit Gross Nil 2.00 Net Nil 2.00 Distribution date n.a 31/08/ Other Data For Financial Year Management expense ratio (MER) (%) Portfolio turnover ratio (PTR) (times) Interim 28/02/18 31/08/17 31/08/16 31/08/15 # * Note: MER The MER is the ratio of the sum of fees and expenses incurred by the Fund for the financial year to the average NAV of the Fund calculated on a daily basis. # The MER is lower than the previous financial year due to the expenses incurred during the six-month period only. PTR The PTR is the ratio of average acquisitions and disposals of the Fund for the financial year to the average NAV of the Fund calculated on a daily basis. *The PTR is higher than the previous financial year due to the increase in trading activities during the period under review. 14

15 13. PERFORMANCE REVIEW 13.1 Class A-MYR During the period, Class A-MYR registered a total return of 3.94% against its benchmark s total return of 4.68% thus underperforming the benchmark by 0.74%. The underperformance of the Fund was mainly due to stock selection. The NAV per unit of Class A-MYR increased to MYR as at 28 February 2018 from MYR as at 31 August Performance of Class A-MYR for Six-Month Period (1 September February 2018) *Benchmark: 4.68% Class A-MYR: 3.94% Source: Lipper *Benchmark = FBM KLCI For the last five financial years, Class A-MYR registered a compounded return of 27.32% while the benchmark registered 13.35%. Class A-MYR outperformed the benchmark by 13.97% for a five-year period. Performance of Class A-MYR for the Last Five Financial Years (1 March February 2018) Class A-MYR: 27.32% *Benchmark: 13.35% Source: Lipper *Benchmark = FBM KLCI 15

16 13.2 Class A-JPY During the period, Class A-JPY registered a return of 12.33% against its benchmark s total return of 10.65%, thus outperformed the benchmark by 1.68%. The NAV per unit of Class A-JPY increased to JPY12,595 as at 28 February 2018 from JPY11,211 as at 31 August Performance of Class A-JPY for Six-Month Period (1 September February 2018) Class A-JPY: 12.33% Benchmark: 10.65% Source: Lipper *Benchmark = FBM KLCI (in JPY) Since commencement, Class A-JPY registered a compounded return of 12.09% against the benchmark s total return of 3.43%, thus outperforming the benchmark by 8.66%. Performance of Class A-JPY for the Last Five Financial Years (1 March February 2018) Class A-JPY: 12.09% *Benchmark: 3.43% Source: Lipper *Benchmark = FBM KLCI (in JPY) 16

17 13.3 Class B-SGD During the period, Class B-SGD registered a return of 10.58% against its benchmark return of 11.18%, thus underperforming the benchmark by 0.60%. The NAV per unit of Class B-SGD increased to SGD as at 28 February 2018 from SGD as at 31 August Performance of Class B-SGD for Six-Month Period (1 September February 2018) *Benchmark: 11.18% Class B-SGD: 10.58% Source: Lipper *Benchmark = FBM KLCI (in SGD) Since commencement, Class B-SGD registered a compounded return of 4.61% against the benchmark s compounded loss of 4.42%, thus outperformed the benchmark by 9.03%. Performance of Class B-SGD for the Last Five Financial Years (1 March February 2018) Class B-SGD: 4.61% *Benchmark: -4.42% Source: Lipper *Benchmark = FBM KLCI (in SGD) 17

18 13.4 Class C-MYR During the period, Class C-MYR registered a total return of 4.04% against its benchmark s total return of 4.68%, thus underperforming the benchmark by 0.64%. The NAV per unit of Class C-MYR increased to MYR as at 28 February 2018 from MYR as at 31 August Performance of Class C-MYR for Six-Month Period (1 September February 2018) *Benchmark: 4.68% Class C-MYR: 4.04% Source: Lipper *Benchmark = FBM KLCI Since commencement, Class C-MYR registered a compounded return of 16.60% against the benchmark s compounded return of 5.16%, thus underperformed the benchmark by 11.44%. Performance of Class C-MYR Since Commencement (11 September February 2018) Class C-MYR: 16.60% *Benchmark: 5.16% Source: Lipper *Benchmark = FBM KLCI 18

19 13.5 Class B-USD During the period, Class B-USD registered a total return of 1.54% against its benchmark s total return of 14.13%, thus underperformed the benchmark by 12.59%. The NAV per unit of Class B-USD increased to USD as at 28 February 2018 from USD as at 31 August Performance of Class B-USD for Six-Month Period (1 September February 2018) *Benchmark:14.13% Class B-USD: 1.54% Source: Lipper *Benchmark = FBM KLCI (in USD) Since commencement, Class B-USD registered a compounded loss of 11.75% against its benchmark s compounded loss of 12.00%. Class B-USD outperformed the benchmark by 0.25%. Performance of Class B-USD Since Commencement (11 September February 2018) Class B-USD: % *Benchmark: % Source: Lipper *Benchmark = FBM KLCI (in USD) 19

20 13.6 Class C-USD During the period, Class C-USD registered a total return of 13.05% against its benchmark s total return of 14.13%, thus underperformed the benchmark by 1.08%. The NAV per unit of Class C-USD increased to USD as at 28 February 2018 from USD as at 31 August Performance of Class C-USD for Six-Month Period (1 September February 2018) *Benchmark: 14.13% Class C-USD: 13.05% Source: Lipper *Benchmark = FBM KLCI (in USD) Since commencement, Class C-USD registered a compounded loss of 2.28% against its benchmark s compounded loss of 12.00%. Class C-USD outperformed the benchmark by 9.72%. Performance of Class C-USD Since Commencement (11 September February 2018) Class C-USD: -2.28% *Benchmark: % Source: Lipper *Benchmark = FBM KLCI (in USD) 20

21 13.7 Class B-JPY During the period, Class B-JPY registered a total return of 12.34% against its benchmark s total return of 10.65%, thus outperformed the benchmark by 1.69%. The NAV per unit of Class B-JPY increased to JPY10,280 as at 28 February 2018 from JPY9,151 as at 31 August Performance of Class B-JPY for Six-Month Period (1 September February 2018) Class B-JPY: 12.34% *Benchmark: 10.65% Source: Lipper *Benchmark = FBM KLCI (in JPY) Since commencement, Class B-JPY registered a compounded return of 2.80% while the benchmark recorded a compounded loss of 6.24%. Class B-JPY outperformed the benchmark by 9.04%. Performance of Class B-JPY Since Commencement (4 October February 2018) Class B-JPY: 2.80% *Benchmark: -6.24% Source: Lipper *Benchmark = FBM KLCI (in JPY) 21

22 Please note that the value of assets in the classes denominated in currencies other than MYR is also subject to the exchange rate of the respective currencies against the MYR. 14. EQUITY MARKET REVIEW (1 September February 2018) During the period under review, the FBM KLCI Index, gained 4.7% to 1,856 points. At the beginning of the period under review, market performance was initially capped by rising geopolitical tension in North Korea which global markets gradually shrugged off due to robust economic data and corporate earnings. However, the FBM KLCI lagged regional peers as investors continued to focus on North Asian markets due to stronger earnings momentum. In its November 2017 Monetary Policy Committee (MPC) meeting, Bank Negara Malaysia (BNM) kept the Overnight Policy Rate (OPR) at 3.00% but indicated that they may review the current degree of monetary policy accommodation. The FBM KLCI index ended December 2017 positively, closing at 1,797 points. Asian markets were off to a good start in 2018 with the Malaysian market continuing its uptrend on foreign buying. BNM raised the OPR by 25 basis points (bps) in January In February 2018, the markets succumbed to selling pressure as inflationary concerns in the United States (US) affected long term bond rates and rattled US markets. The weakness in the US market had a spillover effect worldwide. 15. MONEY MARKET REVIEW (1 September February 2018) During the period under review, money market rates traded higher across the board as BNM hiked the OPR by 25 basis points (bps) in January The increase in the OPR was a pre-emptive move to prevent the build-up of risks that could arise from low interest rates for a prolonged period of time. The central bank was upbeat on global growth and expects the strong global growth momentum to have a positive spillover effect on the domestic economy. BNM expects headline inflation to moderate in The current stance of monetary policy remains accommodative. At the end of the period, the overnight, 1-month, 3-month, 6-month and 12- month rates rose 19 to 25 basis points to 3.18%, 3.40%, 3.67%, 3.78% and 3.88% respectively. 22

23 16. CURRENCY REVIEW (1 September February 2018) The US Dollar (USD) weakened against most major and Asian currencies including the Ringgit during the period under review. The weak greenback was attributed to the US tax reforms and the deterioration of fiscal balance in the coming years. The Bloomberg JP Morgan Asian Dollar Index (ADXY) traded from a low of in October 2017 to a high of in February The Malaysian Ringgit (MYR) was the best performing Asian currency during the period under review. The strength in the Ringgit was underpinned by an increase of interest rate by BNM in January 2018 and higher crude oil price. In addition, robust export growth amid strong external demand for local electronic and electrical products also contributed to the strength of Ringgit. USD/MYR traded from a high of to a low of The Singapore Dollar (SGD) strengthened against the USD as it benefited from a cyclical export recovery. The SGD traded to a high of in January 2018 before paring some gains to close at amid rising US treasury yields. USD/Japanese Yen (JPY) rose to a high of in October 2017 on US interest rate hike expectation and balance sheet reduction. The pair has been largely on the downtrend since the beginning of 2018 amid speculation that the Bank of Japan was preparing to unwind its easy monetary policy. At the end of the period, the JPY gained 3.09% against the USD. 17. STRATEGY EMPLOYED BY INVESTMENT MANAGER FOR THE PERIOD UNDER REVIEW (1 September February 2018) During the period under review, the Manager focused on several investment themes. The Manager focused on companies that were beneficiaries of increased construction. The Fund was also positioned in strong consumer franchises and companies that had the capacity for capital management. The Fund underperformed its benchmark mainly due to stock selection. During the period, the top performing stocks for the Fund were Top Glove Corporation Berhad (Top Glove) and Malayan Banking Berhad (Maybank) while the laggards were British American Tobacco (Malaysia) Berhad (BAT) and DKSH Holdings (Malaysia) Berhad. The Fund is maintaining its exposure in Top Glove and Maybank. Maybank remains a coreholding for the Fund due to its proxy to Malaysia s economic momentum and its attractive dividend yield. Meanwhile, Top Glove is expected to benefit from favourable demand supply dynamics in the glove industry. The company is also pursuing mergers and acquisition. We would look to reduce our position in BAT as we see continued pressure on BAT from the contraband market. The Fund would hold its position in DKSH given 23

24 its dominant position in distribution of fast moving consumer goods and pharmaceuticals. The asset allocation for the period under review is as follows: Asset Allocation 28 February August 2017 MYR % MYR % Quoted equity securities 375,630, ,705, Cash and cash equivalent 59,380, ,492, TOTAL 435,011, ,197, ECONOMIC REVIEW AND OUTLOOK The International Monetary Fund (IMF) raised global growth outlook for 2018 to 3.9% in January 2018 from 3.7% in October 2017 and projects global growth to sustain at 3.9% for The higher growth numbers reflect increased global growth momentum and the impact expected from the recent US tax policy changes. However, accelerating inflation may result in faster-than-expected monetary tightening in 2018 especially in advanced economies such as the US and the Eurozone while a faster-than-expected US Federal Funds Rate (FFR) hike would add greater volatility to global financial markets as bond yields rise. The US economy grew slower in fourth quarter 2017 (4Q17) at 2.6% quarter-onquarter (qoq) real GDP from above 3% in third quarter 2017 (3Q17). Domestic demand, especially from consumption, was the biggest contributor to growth. The labour market continued to develop favourably which was supportive of consumption. For the whole of 2017, the economy grew by 2.3% from 1.5% previously. Meanwhile, inflation rose by 2.1% in December Given the rather stable inflation and unemployment rate, the Federal Reserve (Fed) hiked the FFR for the third time in 2017 in its December meeting to 1.25%-1.50% range. Growth forecasts: Fed (2018: 2.5%, 2019: 2.1%), IMF (2018: 2.7%, 2019: 2.5%). The Eurozone s economy grew by 2.7% in 4Q17 according to the preliminary flash estimate by the Eurostat from 2.8% in 3Q17. Unemployment rate remained at 8.7% for December Consumer price index (CPI) rose by 1.3% in January 2018 compared to 1.4% in December Core inflation improved to 1% in January 2018 from 0.9% in December The rise in core inflation and stable unemployment rate would support the European Central Bank s (ECB) decision in reducing the amount of its asset purchases beginning January 2018 until September 2018 to EUR30 billion from EUR60 billion per month previously. Brexit discussion will continue to take center stage as it nears its expiry date in March Growth forecasts: ECB (2018: 2.3%, 2019: 1.9%), IMF (2018: 2.2%, 2019: 2.0%). Japan s economy grew 2.5% on an annualised qoq basis in 3Q17 benefitting from higher external demand as net trade contributed 2.1 percentage points. However, lacklustre domestic demand dragged down economic growth by 1.2 percentage points. In December 2017, Japan s overall CPI growth accelerated 24

25 to 1% yoy after growing 0.6% in November The Bank of Japan (BOJ) revised upwards the range for real GDP forecasts for 2018 and 2019 fiscal years in view of the improving business condition, likely driven by the improvement in global economic activity which had supported exporters especially manufacturers. On the monetary policy front, the BOJ maintained its monetary policy stance in January Growth forecasts: BOJ (2018: 1.4%, 2019: 0.7%), IMF (2018: 1.2%, 2019: 0.9%). Consensus still expects China to grow above 6% in 2018 and Factors that could support economic growth include resilient consumption, expansionary business surveys and continued commitment towards achieving financial stability. On external factors, trade surplus widened to USD54.7 billion in December 2017 from USD39 billion previously. Exports grew by 10.9% in December 2017 and imports by 4.5% yoy. As consensus do not expect major disruption to trade arising from trade wars for now, China s exports stands to benefit from improving global economic growth. Growth forecasts: IMF (2018: 6.6%, 2019: 6.4%), World Bank (2018: 6.4%, 2019: 6.3%). Malaysia's economy grew 5.9% yoy in 4Q17, above expectations of a 5.8% yoy growth. Overall 2017 expansion recorded a 3-year high of 5.9% yoy from 4.2% yoy in The official forecast for 2018 is between 5.0%-5.5% yoy, mainly on high base effect. In December 2017, exports expanded by only 4.7% yoy compared to 14.5% yoy in November 2017, translating into a 5.0% month-onmonth (mom) contraction while imports growth halved to 7.9% yoy from 15.2% yoy in November Overall 2017 exports growth averaged at 18.9% yoy while trade surplus widened to RM97.3 billion, a 10.3% yoy rise from RM88.2 billion in 2016 attributed to performance of exports. Meanwhile, headline inflation inched slightly to 3.5% yoy in December 2017 following the 11.5% yoy increase in transport costs during the month on higher Brent crude oil price, coupled with the 4.1% yoy increase in food & non-alcoholic beverages segment. Average CPI growth for 2017 is 3.8% yoy against 2.1% yoy in The global stock market s bull run in 2017 ended the first month of 2018 in the green territory. The MSCI World Index rose 23.5% yoy in January 2018 after a 20.1% yoy jump in December The US blue-chip stocks benchmarked by the Dow Jones Industrial Average (DJIA) Index jumped by 31.6% yoy for January 2018 compared to 25.1% recorded in December 2017 supported by an expanding US economy, corporate profits growth and excitement over the recently enacted tax cuts. Similarly, all stock indexes of ASEAN markets recorded double-digit gains, led by Indonesia and the Philippines. Indonesian s Jakarta Composite Index (JCI) rose by 24.8% yoy, Philippines Composite Index (PCOMP) by 21.2% yoy and Singapore s Strait Times Index (STI) by 16.0% yoy. Meanwhile, the Stock Exchange of Thailand (SET) Index climbed 15.8% yoy as Malaysia s FBM KLCI ended up 11.8% yoy. Earlier in the month, the FBM KLCI breached the 1,800 level, which was last seen in Foreign investors remained net buyers of the FBM KLCI in January 2018, buying RM3.4 billion during the month. 25

26 19. INVESTMENT STRATEGY GOING FORWARD Within Malaysia, we would employ a stock picking strategy to focus on selected themes including infrastructure spending, improving consumer sentiment, and corporate restructuring. We expect rail infrastructure including mega projects such as East Coast Rail Link (ECRL), KL-Singapore High Speed Rail (HSR) and KVMRT3 to feature prominently in Other large projects like the Pan Borneo Highway and LRT3 could also see some awards for the remaining work packages. While there was a record in job awards in 2017, we believe that there continues to be strong prospects for contractors to augment their orderbook in As the MIER Consumer Sentiment Index is showing signs of slight recovery, we see investment opportunities in high quality consumer franchises. Over the medium term, another theme that could gain traction is corporate restructuring including Government Linked Companies (GLC) transformation. An improvement in returns from GLCs would be positive for the performance of the local bourse given that GLCs are a sizeable segment of the Malaysian market. While many of the GLCs tend to be large cap companies, we believe that the positive sentiment could have a spillover effect to the overall market. We anticipate that the market could undergo some periods of above average volatility due to a few factors including rising inflation expectations. To mitigate the impact from an increase in volatility, we would have a portion of the portfolio in stocks that have a generally more stable business and/or dividend yield support. While the bulk of the holdings would be in Malaysia, we would have a small portion invested in the region, primarily in Hong Kong/China and Singapore. We favour sectors such as financials, real estate, commodities, and technology. The benefits of investing abroad include access to opportunities that would otherwise not be available in Malaysia and diversification. 20. SIGNIFICANT CHANGES ON STATE OF AFFAIRS OF AMBVTF There are no significant changes on state of affairs of AMBVTF during the financial period under review. 21. CIRCUMSTANCES THAT MATERIALLY AFFECT ANY INTERESTS OF THE UNIT HOLDERS AMB and AMBVTF have no circumstances that materially affect any interests of the unit holders. 26

27 22. CHANGES TO THE SWITCHING CHARGES There are changes to the switching charges in the latest master prospectus (Conventional funds) dated 17 September 2017 which is available at To recipient fund Switching from Equity Bond/Sukuk/ Fixed Income Balanced Money market Equity Up to 2.5% of amount switched MYR25 per transaction MYR25 per transaction Nil Bond/Fixed Income Up to 4.5% of amount switched MYR25 per transaction Up to 3% of amount switched Nil Balanced Up to 1.5% of amount switched MYR25 per transaction MYR25 per transaction Nil Money market Up to 6.5% of amount switched Up to 2% of amount switched Up to 5% of amount switched Not applicable 23. POLICY ON SOFT COMMISSIONS RECEIVED FROM BROKERS During the period under review, AMB and the Investment Manager of AMBVTF did not receive any soft commissions from brokers and/or any related body corporate in relation to their management of AMBVTF. The Manager AMANAH MUTUAL BERHAD 27

28 TRUSTEE'S REPORT TO THE UNIT HOLDERS OF AMB VALUE TRUST FUND We have acted as Trustee of AMB Value Trust Fund ( the Fund ) for the six-month financial period ended 28 February To the best of our knowledge, Amanah Mutual Berhad ( the Management Company ), has operated and managed the Fund in accordance with the following:- (a) (b) (c) limitations imposed on the investment powers of the Management Company and the Trustee under the Deeds, the Securities Commission s Guidelines on Unit Trust Funds, the Capital Markets and Services Act 2007 and other applicable laws; valuation/pricing is carried out in accordance with the Deeds and any regulatory requirements; and creation and cancellation of units are carried out in accordance with the Deeds and any regulatory requirements. For HSBC (Malaysia) Trustee Berhad Tan Bee Nie Head, Trustee Operations Kuala Lumpur, Malaysia 15 March

29 STATEMENT BY MANAGER TO THE UNIT HOLDERS OF AMB VALUE TRUST FUND We, being two of the Directors of AMANAH MUTUAL BERHAD, the Manager of AMB VALUE TRUST FUND ("the Trust"), do hereby state that, in the opinion of the Manager, the accompanying financial statements of the Trust for the six-month period ended 28 February 2018, together with the notes thereto, have been properly drawn up in accordance with Malaysian Financial Reporting Standard 134: Interim Financial Reporting ("MFRS 134"), so as to give a true and fair view of the financial position of the Trust as at 28 February 2018, and of its financial performance and cash flows for the six-month period then ended. Signed on behalf of AMANAH MUTUAL BERHAD, being the Manager of AMB VALUE TRUST FUND, in accordance with a resolution of the directors dated 15 March Tan Sri Abdul Wahid bin Omar Chairman Dato' Abdul Rahman bin Ahmad Director Kuala Lumpur, Malaysia 15 March

30 Independent auditors report to the unit holders of AMB Value Trust Fund Report on the audit of the financial statements Opinion We have audited the financial statements of AMB Value Trust Fund ("the Trust"), which comprise the statement of financial position as at 28 February 2018, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the six-month period then ended, and notes to the financial statements, including a summary of accounting policies, as set out on pages 34 to 64. In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Trust as at 28 February 2018, and of its financial performance and cash flows for the six-month period then ended in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards. Basis for opinion We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors responsibilities for the audit of the financial statements section of our 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 Trust 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 Trust is responsible for the other information. The other information comprises the information included in the annual report of the Trust but does not include the financial statements and our auditors report thereon. 30

31 Independent auditors report to the unit holders of AMB Value Trust Fund (Contd.) Information other than the financial statements and auditors report thereon (cont'd.) Our opinion on the financial statements of the Trust does not cover the other information and we do not and will not express any form of assurance conclusion thereon. In connection with our audit of the financial statements of the Trust, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Trust or our knowledge obtained in the audit or otherwise appears to be materially misstated. When we read the annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to the Manager and Trustee of the Trust and take appropriate action. Responsibility of the Manager and Trustee for the financial statements The Manager is responsible for the preparation of financial statements of the Trust 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 Trust that are free from material misstatement, whether due to fraud or error. In preparing the financial statements of the Trust, the Manager is responsible for assessing the Trust s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Manager either intend to liquidate the Trust or to cease operations, or have no realistic alternative but to do so. The Trustee is responsible for overseeing the Trust's financial reporting process. The Trustee is also responsible for ensuring that the Manager maintains proper accounting and other records as are necessary to enable true and fair presentation of these financial statements. Auditors responsibility for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements of the Trust as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. 31

32 Independent auditors report to the unit holders of AMB Value Trust Fund (Contd.) Auditors responsibility for the audit of the financial statements (cont'd.) 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 Trust, 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. 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 Trust s internal control. 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 Trust s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the financial statements of the Trust 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 Trust to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial statements of the Trust, including the disclosures, and whether the financial statements of the Trust represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with the Manager regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. 32

33 Independent auditors report to the unit holders of AMB Value Trust Fund (Contd.) Other matters This report is made solely to the unit holders of the Trust, as a body, in accordance with the Guidelines on Unit Trust Funds issued by the Securities Commission Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report. Ernst & Young AF: 0039 Chartered Accountants Muhammad Syarizal bin Abdul Rahim No. 3157/01/2019 J Chartered Accountant Kuala Lumpur, Malaysia 15 March

34 AMB VALUE TRUST FUND STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX-MONTH PERIOD ENDED 28 FEBRUARY 2018 INCOME Six-month Six-month period ended period ended Note RM RM Dividend income 5,202,746 5,834,436 Interest income 973,576 1,657,818 Net gain on fair value changes of FVTPL investments 18,458,168 3,184,918 Net loss on foreign currency exchange 7 (2,560,285) - Net loss on foreign exchange forward contracts 8 (100,088) - 21,974,117 10,677,172 EXPENSES Manager's fee 4 3,226,674 3,941,130 Trustee's fee 5 181, ,332 Auditors' remuneration 4,000 4,000 Tax agent's fee 2,232 2,250 Brokerage and other transaction fees 714, ,653 Administrative expenses 303, ,077 4,431,713 5,021,442 NET INCOME BEFORE TAXATION 17,542,404 5,655,730 TAXATION NET INCOME AFTER TAXATION, REPRESENTING TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 17,542,404 5,655,730 Total comprehensive income/(loss) for the period is made up of the following: Realised 30,232,145 13,814,785 Unrealised (12,689,741) (8,159,055) 17,542,404 5,655,730 The accompanying notes form an integral part of the financial statements. 34

35 STATEMENT OF FINANCIAL POSITION AS AT 28 FEBRUARY 2018 ASSETS Note RM RM Investments at FVTPL 9 375,630, ,705,004 Deposits with financial institutions 10 59,200,000 82,365,768 Tax recoverable 110,113 86,941 Other receivables , ,430 Amount due from stockbrokers 4,346, ,010 Cash at bank 180, ,035 TOTAL ASSETS 439,728, ,947,188 LIABILITIES Provision for distribution - 28,755,657 Other payables 71,953 88,706 Derivatives ,088 - Amount due to Manager 13 1,846,978 1,674,018 Amount due to Trustee 28,682 35,059 Amount due to stockbrokers 2,064,159 - TOTAL LIABILITIES 4,113,860 30,553,440 EQUITY Unit holders' capital ,207, ,529,351 Reserves 67,406,801 49,864,397 TOTAL EQUITY/NET ASSET VALUE ATTRIBUTABLE TO UNIT HOLDERS 435,614, ,393,748 TOTAL EQUITY AND LIABILITIES 439,728, ,947,188 NET ASSET VALUE 435,614, ,393,748 NET ASSET VALUE - Class A-MYR 259,793, ,644,086 - Class C-MYR 175,376, ,904,442 - Class B-USD 34, ,826 - Class C-USD 76,611 71,864 - Class B-SGD 31,156 74,806 - Class A-JPY 92,047 88,794 - Class B-JPY 210, , ,614, ,393,748 The accompanying notes form an integral part of the financial statements. 35

36 AMB VALUE TRUST FUND STATEMENT OF FINANCIAL POSITION AS AT 28 FEBRUARY 2018 (CONTD.) Note RM RM NUMBER OF UNITS IN CIRCULATION 14 - Class A-MYR 768,720, ,110,225 - Class C-MYR 453,990, ,270,000 - Class B-USD 10, ,000 - Class C-USD 20,500 20,000 - Class B-SGD 20,000 50,000 - Class A-JPY Class B-JPY ,222,761,485 1,331,560,985 NET ASSET VALUE PER UNIT - Class A-MYR MYR MYR Class C-MYR MYR MYR Class B-USD USD USD Class C-USD USD USD Class B-SGD SGD SGD Class A-JPY JPY 12,595 JPY 11,211 - Class B-JPY JPY 10,280 JPY 9,151 The accompanying notes form an integral part of the financial statements. 36

37 AMB VALUE TRUST FUND STATEMENT OF CHANGES IN EQUITY FOR THE SIX-MONTH PERIOD ENDED 28 FEBRUARY 2018 Reserves Unrealised Unit holders' Realised Non- Capital -Distributable distributable Total Equity RM RM RM RM At 1 September ,046,103 (8,644,327) 31,796, ,197,868 Creation of units for distribution - Class A-MY R 27,735,263 27,735,263 - Class C-MY R 10,959, ,959,726 Creat ion of unit s for sales - Class A-MY R 974, ,660 Cancellat ion of unit s - Class A-MY R (26,522,109) - - (26,522,109) - Class C-MY R (837,249) - - (837,249) - Class B-USD (524,765) - - (524,765) - Class B-SGD (30,936) (30,936) - Class B-JPY (1,099,375) (1,099,375) Tot al comprehensive (loss)/ income for t he period - Class A-MY R - 9,766,481 (5,987,592) 3,778,889 - Class C-MY R - 4,019,666 (2,160,454) 1,859,212 - Class B-USD - 10,025 (5,331) 4,694 - Class C-USD - 1,738 (961) Class B-SGD - 2,178 (2,384) (206) - Class A-JPY - 1,843 (1,169) Class B-JPY - 12,854 (1,164) 11,690 Distribution equalisation for t he period - Class A-MY R 2,398, ,398,590 - Class C-MY R 7,306, ,306,931 - Class B-USD (3,616) - - (3,616) - Class B-SGD (2,558) - - (2,558) - Class B-JPY (27,509) - - (27,509) At 28 February ,373,156 5,170,458 23,637, ,180,651 Comprise:- - Class A-MY R 337,902,466 12,581,863 20,990, ,474,486 - Class C-MY R 162,282,496 (7,313,882) 2,780, ,749,136 - Class B-USD 571,647 (96,609) (96,698) 378,340 - Class C-USD 65,280 2, ,342 - Class B-SGD 85,481 7,081 (22,995) 69,567 - Class A-JPY (8,816) 24,755 66,823 82,762 - Class B-JPY 474,602 (35,490) (81,094) 358,018 At 28 February ,373,156 5,170,459 23,637, ,180,651 The accompanying notes form an integral part of the financial statements. 37

38 AMB VALUE TRUST FUND STATEMENT OF CHANGES IN EQUITY FOR THE SIX-MONTH PERIOD ENDED 28 FEBRUARY 2018 (CONTD.) Reserves Unrealised Unit holders' Realised Non- Capital -Distributable distributable Total Equity RM RM RM RM At 1 September ,529,351 (50,408) 49,914, ,393,748 Creation of units for distribution - Class A-MYR 8,580, ,580,424 - Class C-MYR 5,439, ,439,298 - Class C-USD 1, ,632 Creation of units for sales - Class A-MYR 44, ,385 Cancellation of units - Class A-MYR (29,591,540) - - (29,591,540) - Class B-USD (342,473) - - (342,473) - Class B-SGD (37,219) - - (37,219) Total comprehensive income/ (loss) for the period - Class A-MYR - 18,690,309 (8,017,325) 10,672,984 - Class C-MYR - 11,488,072 (4,648,551) 6,839,521 - Class B-USD - 26,460 (11,812) 14,648 - Class C-USD - 4,995 (2,039) 2,956 - Class B-SGD - 3,524 (1,913) 1,611 - Class A-JPY - 5,719 (2,466) 3,253 - Class B-JPY - 13,066 (5,635) 7,431 Distribution equalisation for the period - Class A-MYR (24,556,927) - - (24,556,927) - Class C-MYR 5,192, ,192,846 - Class B-USD (44,451) - - (44,451) - Class C-USD Class B-SGD (8,042) - - (8,042) At 28 February ,207,443 30,181,737 37,225, ,614,244 Comprise:- - Class A-MYR 206,619,532 21,895,869 31,278, ,793,412 - Class C-MYR 161,012,372 8,306,963 6,056, ,376,107 - Class B-USD 184,723 (60,670) (89,503) 34,550 - Class C-USD 67,071 7,824 1,716 76,611 - Class B-SGD 40,220 12,349 (21,413) 31,156 - Class A-JPY (8,816) 32,349 68,514 92,047 - Class B-JPY 292,341 (12,947) (69,033) 210,361 At 28 February ,207,443 30,181,737 37,225, ,614,244 The accompanying notes form an integral part of the financial statements. 38