AMB SMALLCAP TRUST FUND INTERIM REPORT. Manager s Report Trustee s Report 13. Statement by Manager 14. Auditors Report 15-18

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2 AMB SMALLCAP TRUST FUND INTERIM REPORT For the Six-Month Period Ended 31 January 2018 Contents Page Manager s Report 2-12 Trustee s Report 13 Statement by Manager 14 Auditors Report Statement of Comprehensive Income 19 Statement of Financial Position 20 Statement of Changes in Equity 21 Statement of Cash Flows 22 Notes to the Financial Statements Corporate Information 42 1

3 MANAGER S REPORT AMB SMALLCAP TRUST FUND Dear Unit Holders, Amanah Mutual Berhad (AMB) as the Manager of AMB SmallCap Trust Fund ( AMBSCTF or the Fund ) is pleased to present the Manager s Report of AMBSCTF for the six-month period ended 31 January CATEGORY / TYPE Equity Fund (Small Cap) / Growth Fund 2. INVESTMENT OBJECTIVE To achieve medium to long-term capital growth by primarily investing into securities of small and medium sized companies: listed on the Bursa Malaysia s Main Market, ACE (Access, Certainty, Efficiency) Market and/or any other boards approved by the Securities Commission (SC); with market capitalisation of not more than the limit considered by the SC to be appropriate for fund similar to this Fund; and which have the potential for capital appreciation over the medium to long term. Note: The Fund invests primarily in selected small and medium sized companies listed on the Main Market of the Bursa Malaysia (including ACE Market) with market capitalization of not more than RM750 million which have the potential for capital appreciation over the medium to long term. 3. ASSET ALLOCATION Minimum 70%; maximum 98% in stocks and shares of small and medium cap companies. Minimum 2%; maximum 30% in liquid assets and short-term money market investments. 4. PERFORMANCE BENCHMARK 70% of the performance of the FTSE Bursa Malaysia Small Cap Index (FBM SmallCap); and 30% of the performance of the FTSE Bursa Malaysia Top 100 index (FBM100) Note: Prior to 17 September 2017, the benchmark was 60% of the performance of the FBM SmallCap, 35% of the performance of the FTSE Bursa Malaysia 100 index (FBM100); and 5% of the 1-month fixed deposit rate of commercial banks (1-month FD rate) 2

4 5. LAUNCH DATE / COMMENCEMENT DATE 3 March 2004 / 24 March DISTRIBUTION POLICY It is not the main objective of the Fund to distribute income as the main focus of the Fund is to secure capital growth in line with the performance of the Fund s benchmark. Any distribution is at the Manager s discretion, subject to Trustee s approval. 7. UNITHOLDING STATISTICS Breakdown of unit holdings by size as at 31 January 2018, are as follows: Size of Holdings No. of Unit Holders No. of Units Held No. % Units % 5,000 and below ,040, ,001 to 10, ,351, ,001 to 50, ,089, ,001 to 500, ,307, ,001 and above ,722, TOTAL 1, *236,511, * Excludes units kept by the Manager. 8. FUND PERFORMANCE For Financial Period / Year Total net asset value (NAV)(RM 000) Interim 31/01/2018 As at 31/07/2017 As at 31/07/2016 As at 31/07/ , , , ,170 Units in circulation ( 000) 236, , , ,202 Unit NAV (RM) NAV per unit NAV per unit (highest) NAV per unit (lowest)

5 9. INVESTMENT PORTFOLIO Sector Interim 31/01/2018 (%) As at 31/07/2017 (%) As at 31/07/2016 (%) As at 31/07/2015 (%) Quoted Equity Securities Construction Consumer Products Finance Industrial Products Infrastructure Project Company Plantations Properties REITs Technology Trading/Services Warrants Nil 0.44 Total Quoted Equity Securities Cash TOTAL Note: The above-mentioned percentages are based on the total NAV of the fund at the end of the financial year. 10. PERFORMANCE DATA 10.1 Average Total Return per Annum of AMBSCTF against Benchmark Period Average Total Return per Annum (%) AMBSCTF *Benchmark Six-month One year Three years Five years Since commencement Source: Lipper *Benchmark: 70% of the performance of FBM SmallCap and 30% of the performance of FBM 100. Note: Annualized 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 4

6 10.2 Annual Total Returns of AMBSCTF for the last Five Financial Years AMB SmallCap Trust Fund For Financial Interim As at As at As at As at As at Period / Year 31/01/18 31/07/17 31/07/16 31/07/15 31/07/14 31/07/13 Capital return (%) (0.02) (16.35) Income return (%) Nil 8.32 Nil Nil Total return of AMBSCTF (%) (0.02) (16.35) Total return of *benchmark (%) (3.57) (12.77) Source: Lipper *Benchmark: 70% of the performance of FBM SmallCap and 30% of the performance of FBM 100. Note: 1. Capital return (%) = NAV per unit on ex-date NAV per unit at the beginning of the financial -1 x Income return (%) = Gross income distribution declared NAV per unit at the beginning of the financial year 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 Distributions For Financial Period / Year Net Income Distributed (RM 000) Distributions (sen) Interim 31/01/2018 As at 31/07/2017 As at 31/07/2016 As at 31/07/2015 Nil 8,917 Nil Nil Gross Nil 4.00 Nil Nil Net Nil 4.00 Nil Nil Distribution Date N/a 01/08/2017 N/a N/a 5

7 10.4 Other Data For Financial Period / Year Management expense ratio (MER) (%) Portfolio turnover ratio(ptr) (times) Interim 31/01/2018 As at 31/07/2017 As at 31/07/2016 As at 31/07/2015 # * 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 lower than the previous financial year due to fewer trading activities done during the six-month period. 6

8 11. PERFORMANCE REVIEW During the period, AMBSCTF registered a total return of 7.66% against its benchmark total return of 1.55%. The Fund outperformed the benchmark by 6.11%. The outperformance of the Fund was mainly due to better stock selection such as Press Metal Berhad and V.S Industry Berhad. The NAV per unit of AMBSCTF increased to RM as at 31 January 2018 from RM as at 31 July Performance of AMBSCTF for Six-Month Period (1 August 2017 to 31 January 2018) AMBSCTF: 7.66% *Benchmark: 1.55% Source: Lipper *Benchmark: 70% of the performance of FBM SmallCap and 30% of the performance of FBM 100. For the last five financial years, AMBSCTF registered a compounded return of 59.19% and the benchmark s compounded return was 35.25%. AMBSCTF outperformed the benchmark by 23.94% during the 5-year period. Performance of AMBSCTF for the Last Five Financial Years (1 February 2013 to 31 January 2018) AMBSCTF: 59.19% *Benchmark: 35.25% Source: Lipper *Benchmark: 70% of the performance of FBM SmallCap and 30% of the performance of FBM

9 12. EQUITY MARKET REVIEW (1 August January 2018) During the period under review, the FBM Smallcap Index declined 1.1% to 17,084 points while the FTSE Bursa Malaysia KLCI (FBM KLCI) Index fared better, closing 6.2% higher at 1,869 points. 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 at the beginning of the period under review. 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. BNM s hawkish stance coupled with strength in macro numbers and oil price helped the Ringgit which strengthened 9.8% against the US Dollar to for the period under review while Brent futures gained 31.1% to USD69/bbl. 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 terms of corporate development, RHB Bank Bhd and AMMB Holdings Bhd called off their plans for a merger citing that both banks could not arrive at mutually acceptable terms. Meanwhile, Sime Darby completed its internal restructuring towards the end of MONEY MARKET REVIEW (1 August January 2018) Malaysia s Gross Domestic Product (GDP) gained 6.2% year-on-year (yoy) in third quarter 2017 (3Q17) boosted by robust private consumption, government spending, investment and exports. In September 2017, inflation rose 4.3% yoy due to an increase in transportation costs amid high fuel prices but subsequently moderated to 3.5% yoy in December 2017 on the back of higher base effect. Headline inflation averaged at 3.7% for whole of BNM raised the policy rate to 3.25% on 25 January 2018 as a pre-emptive move to prevent the build-up of risks that could arise from low interest rates for a prolonged period of time. BNM expects headline inflation to moderate in 2018 although 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 traded marginally higher to 3.23%, 3.40%, 3.67%, 3.78% and 3.88% respectively. 8

10 14. STRATEGY EMPLOYED BY PORTFOLIO MANAGER FOR THE PERIOD UNDER REVIEW (1 August January 2018) During the period under review, we focused on several investment themes such as companies that benefitted from increased construction and a stronger USD against the Ringgit, and high dividend paying companies or companies that had the capacity for more capital management. During the period, the top performing stocks for the Fund were Press Metal Berhad (Press Metal) and V.S Industry Berhad (V.S Industry) while the laggards were Mitrajaya Holdings Berhad (Mitrajaya) and DKSH Holdings (Malaysia) Berhad (DKSH). The Fund is maintaining its exposure in V.S. Industry and Press Metal as the latter has potential to increase its dividends going forward. Meanwhile, V.S. Industry remains an attractive proxy to the growth of its customers, including Dyson. The Fund will hold its position in DKSH as the business is expected to show improvement from recovering consumer sentiment. The Fund has disposed its position in Mitrajaya due to potential dilution from a rights issue. The asset allocation for the period under review is tabulated as below: Asset Allocation Interim 31 January 2018 As at 31 July 2017 RM % RM % Quoted equity securities 117,620, ,148, Cash and cash equivalent 20,078, ,972, TOTAL 137,699, ,121, 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 9

11 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 2017 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 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

12 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. 16. INVESTMENT STRATEGY MOVING FORWARD With USD strength being capped as expectations of reflation in the US become more realistic, we believe that this would create a relatively conducive environment for performance from Emerging Markets including Malaysia. Besides positive earnings momentum, we believe that the FBM KLCI s performance would be underpinned by better corporate earnings outlook and pump priming. We will continue to 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 Over the medium term, another theme that could gain traction is 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. 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. 11

13 17. SIGNIFICANT CHANGES ON STATE OF AFFAIRS OF AMBSCTF There are no significant changes on state of affairs of AMBSCTF for the period under review. 18. CIRCUMSTANCES THAT MATERIALLY AFFECT ANY INTERESTS OF THE UNIT HOLDERS AMB and AMBSCTF have no circumstances that materially affect any interests of the unit holders. 19. 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 20. POLICY ON SOFT COMMISSIONS RECEIVED FROM BROKERS During the period under review, AMB and the portfolio Manager of AMBSCTF did not receive any soft commissions from brokers and/or any related body corporate in relation to its investment of AMBSCTF. The Manager AMANAH MUTUAL BERHAD 12

14 TRUSTEE'S REPORT TO THE UNITHOLDERS OF AMB SMALLCAP TRUST FUND We, CIMB COMMERCE TRUSTEE BERHAD (the "Trustee"), being the Trustee for AMB SmallCap Trust Fund ("the Fund") are of the opinion that Amanah Mutual Berhad ("the Manager"), acting in the capacity as Manager of the Fund, has fulfilled its duties in the following manner for the six-month period ended 31 January In our opinion : a) b) c) The Fund has been managed in accordance with the limitations imposed on the investment powers of the Manager and the Trustee under the Deed, Supplemental Deed, the Securities Commision 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 sixmonth period ended 31 January 2018; Valuation/pricing of units of the Fund has been carried out in accordance with the Deed, Supplemental Deed and relevant regulatory requirements; and Creation and cancellation of units have been carried out in accordance with the Deed, Supplemental Deed and relevant regulatory requirements. For and on behalf of the Trustee CIMB COMMERCE TRUSTEE BERHAD ( A) LEE KOOI YOKE Chief Operating Officer Kuala Lumpur, Malaysia 15 March

15 STATEMENT BY MANAGER TO THE UNIT HOLDERS OF AMB SMALLCAP TRUST FUND We, being two of the Directors of AMANAH MUTUAL BERHAD, the Manager of AMB SMALLCAP TRUST FUND ("the Trust"), do hereby state that, in the opinion of the Manager, the accompanying financial statements of the Trust for the sixmonth period ended 31 January 2018, together with the notes thereto, have been properly drawn up in accordance with 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 31 January 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 SMALLCAP 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

16 Independent auditors report to the unit holders of AMB SmallCap Trust Fund Report on the audit of the financial statements Opinion We have audited the financial statements of AMB SmallCap Trust Fund ("the Trust"), which comprise the statement of financial position as at 31 January 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 19 to 41. In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Trust as at 31 January 2018, and of its financial performance and cash flows for the six-month period then ended in accordance with Malaysian Financial Reporting Standard 134: Interim Financial Reporting ("MFRS 134"). 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 of the Trust and our auditors report thereon. 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. 15

17 Independent auditors report to the unit holders of AMB SmallCap Trust Fund (Contd.) Information other than the financial statements and auditors report thereon (cont'd.) 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 interim 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 of the Trust is responsible for the preparation of financial statements of the Trust that give a true and fair view in accordance with MFRS 134. 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. 16

18 Independent auditors report to the unit holders of AMB SmallCap 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. 17

19 Independent auditors report to the unit holders of AMB SmallCap 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 /01/2019 J Chartered Accountant Kuala Lumpur, Malaysia 15 March

20 AMB SMALLCAP TRUST FUND STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX-MONTH PERIOD ENDED 31 JANUARY 2018 Six-month Six-month period ended period ended Note RM RM INCOME Dividend income 1,508,235 1,229,505 Interest income 427, ,904 Net gain on FVTPL investments 9,214,770 4,385,628 11,150,314 5,961,037 EXPENSES Manager's fee 4 1,004, ,743 Trustee's fee 5 46,857 39,515 Auditors' remuneration 4,500 4,500 Tax agent's fee 2,225 2,250 Brokerage and other transaction fees 132, ,463 Administrative expenses 90,188 81,630 1,280,351 1,226,101 NET INCOME BEFORE TAXATION 9,869,963 4,734,936 TAXATION NET INCOME AFTER TAXATION REPRESENTING TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 9,869,963 4,734,936 Net income after tax is made up of the following: Realised 4,475,354 1,935,314 Unrealised 5,394,610 2,799,622 9,869,964 4,734,936 The accompanying notes form an integral part of the financial statements. 19

21 AMB SMALLCAP TRUST FUND STATEMENT OF FINANCIAL POSITION AS AT 31 JANUARY 2018 Note RM RM ASSETS Investments at FVTPL 7 117,620,723 99,148,109 Deposits with financial institutions 8 20,062,235 28,923,767 Tax recoverable 12,735 3,388 Other receivables 9 100, ,357 Amount due from manager 10-92,368 Amount due from stockbrokers 598, ,501 Cash at bank 16,667 49,162 TOTAL ASSETS 138,410, ,751,652 LIABILITIES Provision for income distribution - 8,917,260 Other payables 81,101 73,130 Amount due to Manager , ,609 Amount due to Trustee 8,653 8,055 Amount due to stockbrokers 1,506,348 - TOTAL LIABILITIES 1,816,170 9,171,054 EQUITY Unit holders' capital ,659, ,515,298 Reserves (64,737) (9,934,701) TOTAL EQUITY/NET ASSET VALUE ATTRIBUTABLE TO UNIT HOLDERS 136,594, ,580,597 TOTAL EQUITY AND LIABILITIES 138,410, ,751,651 NET ASSET VALUE 136,594, ,580,597 NUMBER OF UNITS IN CIRCULATION ,511, ,931,500 NET ASSET VALUE PER UNIT The accompanying notes form an integral part of the financial statements. 20

22 AMB SMALLCAP TRUST FUND STATEMENT OF CHANGES IN EQUITY FOR THE SIX-MONTH PERIOD ENDED 31 JANUARY 2018 Reserves Unit holders' Realised Unrealised capital Distributable Non-distributable Total equity RM RM RM RM At 1 August ,703,133 (30,688,190) 8,175, ,190,228 Total comprehensive income for the period - 1,935,314 2,799,622 4,734,936 Cancellation of units (1,266,703) - - (1,266,703) At 31 January ,436,430 (28,752,876) 10,974, ,658,461 At 1 August ,515,298 (30,590,508) 20,655, ,580,597 Total comprehensive income for the period 4,475,354 5,394,610 9,869,964 Creation of units for - Distribution 8,918,669 8,918,669 - Sale 1,645,641 1,645,641 Cancellation of units (3,420,443) (3,420,443) At 31 January ,659,165 (26,115,154) 26,050, ,594,428 The accompanying notes form an integral part of the financial statements. 21

23 AMB SMALLCAP TRUST FUND STATEMENT OF CASH FLOWS FOR THE SIX-MONTH PERIOD ENDED 31 JANUARY 2018 CASH FLOWS FROM OPERATING AND INVESTING ACTIVITIES Six-month period ended Six-month period ended RM RM Proceeds from sale/redemption of investments 21,217,033 37,543,334 Purchase of investments (29,368,482) (44,264,334) Net dividend received 1,604,046 1,307,980 Interest received 428, ,602 Manager's fee paid (991,262) (841,785) Trustee's fee paid (46,259) (39,283) Payment for other fees and expenses (86,465) (53,730) Auditors' remuneration paid (5,000) - Net cash used in operating and investing activities (7,247,652) (5,992,216) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from creation of units 10,656,678 - Payments for cancellation of units (3,385,793) (1,266,703) Distribution to unit holders (8,917,260) Net cash used in financing activities (1,646,375) (1,266,703) NET DECREASE IN CASH AND CASH EQUIVALENTS (8,894,027) (7,258,919) CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 28,972,929 26,341,785 CASH AND CASH EQUIVALENTS AT END OF THE PERIOD 20,078,902 19,082,866 CASH AND CASH EQUIVALENTS COMPRISE: Cash at bank 16, ,131 Deposits with financial institutions (Note 8) 20,062,235 18,670,735 20,078,902 19,082,866 The accompanying notes form an integral part of the financial statements. 22

24 AMB SMALLCAP TRUST FUND NOTES TO THE FINANCIAL STATEMENTS - 31 JANUARY THE TRUST, THE MANAGER AND THEIR PRINCIPAL ACTIVITIES AMB SmallCap Trust Fund (hereinafter referred toas "the Trust") was constituted pursuant to the execution of a Deed dated 11 February 2004 between Amanah Mutual Berhad as the Manager, and Malaysian Trustee Berhad as the Trustee and the Registered Holders of the Trust. A Second Supplemental Deed dated 28 January 2014, which was entered into between the Manager, Malaysian Trustee Berhad and the new trustee, CIMB Commerce Trustee Berhad, was issued to amend the principal Deed. The Trust commenced operations on 3 March 2004 and will continue to be in operations until terminated by the Trustee as provided under the Deed. The principal activity of the Trust is to invest in a selected portfolio of investments in small and medium size companies listed on the Main Market of Bursa Malaysia Securities Berhad and other approved investments. Amanah Saham Nasional Berhad ("ASNB") and Permodalan Nasional Berhad ("PNB"), companies incorporated in Malaysia, are the holding and ultimate holding company of the Manager, respectively. The Manager, a company incorporated in Malaysia, is principally engaged in the management of unit trust funds. The financial statements were authorised for issue by the Board of Directors of AMB in accordance with the resolution of the Directors on 15 March BASIS OF PREPARATION The financial statements for the six-month period ended 31 January 2018 have been prepared in accordance with MFRS 134: Interim Financial Reporting. (a) Early adoption of MFRS 9 Financial Instruments : Classification and Measureme ("MFRS 9") The Trust has applied MFRS 9 Financial Instruments ("MFRS 9") (as issued in November 2009 and revised in October 2010) and the related consequential amendments in advance of their effective dates. The date of initial application (i.e the date on which the Trust has assessed its existing financial assets and financial liabilities) is 1 August

25 2. BASIS OF PREPARATION (CONTD.) (b Changes in accounting policies The new and revised MFRSs which are mandat ory for companies wit h financial period beginning on or after 1 August 2016 do not give rise toany significant effects on the financial statements of the Trust. (c) Standards issued but not yet effective The Standards, Amendments and Issues Committee ("IC") Interpretations t hat have been issued by Malaysian Account ing St andards Board ("MASB") as at t he dat e of aut horisat ion of t hese financial st at ement s are not relevant to the Trust except for MFRS 9. Effective for financial periods beginning on or after 1 January 2018 MFRS 9 Financial Instruments (IFRS 9 as issued by IASB in July 2014) On 24 July 2014, t he Int ernat ional Account ing St andard Boards ("IASB") issued the final version of IFRS 9 which includes the three phases of the financial inst rument s project s; Classificat ion and Measurement, Impairment (Expect ed Credit Losses) and Hedge Account ing. Subsequent ly, MASB issued a pronouncement on 17 November 2014 to fully adopt the new IFRS 9 requirement s. As t he Trust has early adopt ed t he previous version of MFRS 9 prior to 31 January 2015, the Trust may continue to apply that version of MFRS 9 until the mandatory effective date of 1 January The Trust is still in the process of quantifying the effect of the adoption of the final version of MFRS SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Financial instruments Financial asset s and financial liabilit ies are recognised when t he Trust becomes a party to the contractual provision of the instrument. Financial asset s and financial liabilit ies are init ially measured at fair value. Transaction costs that are directly attributable tothe acquisition or issue of financial asset s and financial liabilit ies (ot her t han financial asset s and financial liabilit ies at fair value t hrough profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to t he acquisit ion of financial asset s and financial liabilit ies at fair value t hrough profit or loss are recognised immediat ely in profit or loss. 24

26 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) (b) Financial assets All regular way purchases or sales of financial asset s are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the market place. All recognised financial assets are subsequently measured in their entirety at amortised cost or fair value, depending on the classification of the assets. (i) Classification of financial assets Unless designat ed as at on init ial recognit ion, debt inst rument s t hat meet t he following condit ions are subsequent ly measured at amort ised cost less impairment loss: the asssets are held within a business model whose objectives is to hold assets in order to collect contractual cash flows ; and the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount out st anding. Debt inst rument s t hat do not meet eit her of t he crit eria above are classified as FTVPL. Equity instruments are classified as either FVTPL or FVTOCI, depending on the investment objectives. (ii) Financial assets at fair value through profit or loss ("FVTPL") Invest ment s in equit y inst rument s are classified as FVTPL, unless t he Trust designat es an invest ment t hat is not held for t rading as FVTOCI on init ial recognit ion. A financial asset is held for t rading if : it has been acquired principally for the purpose of selling it in the near term; or on initial recognition it is part of the portfolio of identified financial instruments that the Trust manages together and has evidence of a recent actual pattern of short-term profit-taking; or it is a derivative that is not designated and effective as a hedging inst rument or a financial guarant ee. 25

27 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) (b) Financial assets (contd.) (ii) Financial assets at fair value through profit or loss ("FVTPL")(contd.) Debt inst rument s t hat do not meet t he amort ised cost crit eria (see above) are measured at FVTPL. In addit ion, debt inst rument s t hat meet t he amort ised cost crit eria but are designat ed as at FVTPL are measured at FVTPL. A debt inst rument may be designat ed as at FVTPL upon init ial recognit ion if such designat ion eliminat es or significant ly reduces a measurement or recognit ion inconsist ency t hat would arise from measuring asset s or liabilit ies or recognising t he gains and losses on them on different bases. Debt instruments are reclassified from amortised cost to FVTPL when the business model is changed such that the amortised cost criteria are no longer met. Reclassification of debt instruments that are designated as at FVTPL on initial recognition is not allowed. Financial asset s at FVTPL are measured at fair value at t he end of each report ing period, wit h any gains or losses arising on remeasurement recognised in profit or loss. Interest income on debt instruments as at FVTPL is disclosed separately in the profit or loss. Dividend income on invest ment s in equit y inst rument s at FVTPL is recognised in profit or loss when the Trust's right to receive dividends is est ablished in accordance wit h MFRS 118 Revenue and is disclosed separately in the profit or loss. (iii) Financial assets at fair value through other comprehensive income ("FVTOCI") On initial recognition, the Trust can make an irrevocable election (on an inst rument-by-inst rument basis) t o designat e invest ment s in equit y instruments as at FVTOCI. Designation at FVTOCI is not permitted if the equit y invest ment is held for t rading. Debt instruments with the investment objectives to achieve both the collect ion of cont ract ual cash flows and t he sales of financial asset s are designated as FVTOCI. Financial asset s at FVTOCI are init ially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognised in other comprehensive income and accumulat ed in t he unrealised reserve. The cumulat ive gain or loss will not be reclassified t o profit or loss on disposal of the investments. 26

28 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) (b) Financial assets (contd.) (iv) Impairment of financial assets Financial assets that are measured at amortised cost are assessed for impairment at the end of each reporting period. Financial assets are considered tobeimpaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial assets, estimated future cash flows of the asset have been affected. Objective evidence of impairment could include: Significant financial difficulty of the issuer or counterparty; or Breach of contract, such as default or delinquency in interest or principal payments; or It becomes probable that the borrower will enter bankruptcy or financial reorganisation; or The disappearance of an active market for that financial asset because of financial difficulties. The amount of the impairment loss recognised is the difference between the asset's carrying amount and the present value of the estimated future cash flows reflecting the amount of collateral and guarantee, discounted at the financial asset's original effective interest rate. The carrying amount of the financial asset is directly reduced by the impairment loss for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are recognised in profit or loss. 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 through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. 27

29 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) (b) Financial assets (contd.) (v) Derecognition of financial assets The Trust derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Trust neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Trust recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Trust retains substantially all the risks and rewards of ownership of a transferred financial asset, the Trust continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received. On derecognition of financial asset classified as FVTOCI, the cumulative gain or loss previously accumulated in unrealised reserve is not reclassified toprofit or loss, but is reclassified to distributable realised reserve. On derecognition of financial asset classified as FVTPL, the cumulative unrealised gain or loss previously recognised is transferred to realised gain or loss on disposal in profit or loss. (c) Financial liabilities and equity instruments (i) Classification as debt or equity Debt and equity instruments issued by the Trust are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. (ii) Financial liabilities Financial liabilities, within the scope of MFRS 9, are recognised in the statement of financial position when, and only when, the Trust becomes a party to the contractual provisions of the financial instruments. 28

30 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) (c) Financial liabilities and equity instruments (contd.) (iii) Derecognition of financial liabilities The Trust derecognises financial liabilities when, and only when, the Trust s obligations are discharged, cancelled or expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss. (iv) Unit holders' capital The unit holders' contributions to the Trust meet the definition of puttable instruments classified as equity instruments under the revised MFRS 132 Financial Instruments: Presentation. Distribution equalisation represents the average distributable amount included in the creation and cancellation prices of units. The amount is either refunded to unit holders by way of distribution and/or adjusted accordingly when units are cancelled. (d) Income recognition Gross dividend income from investments are recognised on a declared basis when the right to receive dividends has been established. Realised gain on disposal of investments is measured as the difference between the net proceeds and its carrying amount. Interest income from investments at amortised cost are accounted for on an accrual basis based on effective interest rate method. (e) Cash and cash equivalents For the purposes of the statement of cash flows, cash and cash equivalents include cash at bank and highly liquid instruments with maturities three months or less, which have an insignificant risk of changes in value. 29

31 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) (f) Income tax Current tax assets and liabilities are measured at the amount expected to be recovered from or paid tothe tax authorities. The tax rates and tax laws used to compute the amount 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. No deferred tax is recognised as there are no material temporary differences. (g) Fair value measurement The Trust measures its financial assets at fair value at each reporting date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell or transfer the liability takes place either: In the principal market for the asset or liability, or In the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible to by the Trust. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. The Trust uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. 30