AmIncome Flexi. Maturity Report 12 November 2015

Transcription

1 AmIncome Flexi Maturity Report 12 November 2015

2 TRUST DIRECTORY Manager AmFunds Management Berhad (formerly known as AmInvestment Services Berhad) 9 th & 10 th Floor, Bangunan AmBank Group 55 Jalan Raja Chulan Kuala Lumpur Board of Directors Pushparani a/p Moothathamby Mustafa Mohd Nor Tai Terk Lin Datin Maznah Mahbob Harinder Pal Singh Mohd Fauzi Mohd Tahir Investment Committee Tai Terk Lin Harinder Pal Singh Mustafa Mohd Nor Dato Mohd Effendi Abdullah Dr. Frank Richard Ashe Datin Maznah Mahbob Trustee Deutsche Trustees Malaysia Berhad Auditors and Reporting Accountants Ernst & Young Taxation Adviser Deloitte Tax Services Sdn Bhd

3 CONTENTS 1 Manager s Report 7 Independent Auditor s Report to the Unitholders 9 Statement of Financial Position 10 Statement of Comprehensive Income 12 Statement of Changes in Equity 13 Statement of Cash Flows 14 Notes to the Financial Statements 31 Statement by the Manager 32 Trustee s Report 33 Directory

4 MANAGER S REPORT Dear Unitholders, We are pleased to present you the Manager s report and the audited accounts of AmIncome Flexi ( Fund ) for the financial period ended 1 September 2015 to 12 November 2015 (date of maturity). Salient Information of the Fund Name Category/ Type Objective AmIncome Flexi ( Fund ) Bond (close-ended) / Income The Fund is a 3-year close-ended bond fund that aims to provide annual income distribution* throughout the duration of the Fund. Note : * Income distribution (if any) will be paid via cheque or by instructing us to credit into your bank account. Duration Performance Benchmark The Fund was established on 18 September 2012 and shall exist for as long as it appears to the Manager and the Trustee that it is in the interests of the unitholders for it to continue. In some circumstances, the unitholders can resolve at a meeting to terminate the Fund. The Fund has a yearly target return which at least matches the 1- year AmBank (M) Berhad Conventional Fixed Deposit Rate (fixed as at Commencement Date). You may visit ww.ambankgroup.com/en/ratesfeescharges/pages/unittrustprices. aspx or call us at (03) to find out the 1-year AmBank (M) Berhad Conventional Fixed Deposit Rate as at Commencement Date. The risk profile of the Fund s investment is higher than the risk profile of the fixed deposit and consequently, the Fund is expected to outperform the 1-year AmBank (M) Berhad Conventional Fixed Deposit Rate. There is no guarantee that the Fund s performance will always outperform the benchmark. Income Distribution Policy Breakdown of Unit Holdings by Size Subject to availability of income, distribution is paid once a year. As at 12 November 2015, there were no units left in the Fund. Size of holding As at 12 November 2015 As at 31 August 2015 No of units held Number of unitholders No of units held Number of unitholders 5,000 and below - - 2,444, ,001-10, ,592, ,001-50, ,859, , , ,949, ,001 and above - - 2,309,

5 Fund Performance Data Portfolio Composition Details of portfolio composition of the Fund for the financial period as at 12 November 2015 and three financial years/periods as at 31 August are as follows: As at % FY 2015 % FY 2014 % As at % Foreign corporate bonds Local corporate bonds Cash and others Total Note: The abovementioned percentages are calculated based on total net asset value. Performance Details Performance details of the Fund for the financial period ended 12 November 2015 and three financial years/period ended 31 August are as follows: 2 ½ months ended ½ months ended FY 2015 FY 2014 Net asset value () - 60,351,684 57,535,819 61,060,041 Units in circulation - 59,156,113 60,764,503 61,449,218 Net asset value per unit () -* * Highest net asset value per unit () * * Lowest net asset value per unit () * * Benchmark performance (%) Total return (%) (1) Capital growth (%) Income distribution (%) Gross distribution (sen per unit) Net distribution (sen per unit) Management expense ratio (%) (2) Portfolio turnover ratio (times) (3) * Above prices and net asset value per unit are not shown as ex-distribution. Note: (1) Total return is the actual/annualised return of the Fund for the respective financial periods/years computed based on the net asset value per unit and net of all fees.

6 (2) Management expense ratio ( MER ) is calculated based on the total fees and expenses incurred by the Fund divided by the average fund size calculated on a daily basis. The MER increased by 0.06% as compared to 0.15% per annum for the financial year ended 31 August 2015 mainly due to decrease in average fund size. (3) Portfolio turnover ratio ( PTR ) is calculated based on the average of the total acquisitions and total disposals of investment securities of the Fund divided by the average fund size calculated on a daily basis. The PTR increased by 0.02 times (4.3%) as compared to 0.46 times for the financial year ended 31 August 2015 mainly due to increase in investing activities. Average Total Return (as at 12 November 2015) AmIncome Flexi (a) % AMBB (b) % One year Three years Since launch (18 September 2012) Annual Total Return Financial Years/Period Ended (31 August) AmIncome Flexi (a) % AMBB (b) % (c) (a) Independently verified by Novagni Analytics and Advisory Sdn Bhd. (b) AmBank (M) Berhad Conventional 1 year fixed deposit rate on 18 September 2012 ( AMBB ) (Obtainable from: (c) Total actual return for the financial period from 18 September 2012 (date of commencement) to 31 August The Fund performance is calculated based on the net asset value per unit of the Fund. Average total return of the Fund and its benchmark for a period is computed based on the absolute return for that period annualised over one year. Note: Past performance is not necessarily indicative of future performance and that unit prices and investment returns may go down, as well as up. Fund Performance For the financial period under review, the Fund registered a return of 6.15% which was entirely capital growth in nature. Thus, the Fund s return of 6.15% has outperformed the benchmark s return of 3.20% by 2.95%. As at 12 November 2015, the net asset value ( NAV ) per unit stood at nil as all the unitholders of the Fund have fully redeemed their units compared to as at 31 August

7 The line chart below shows comparison between the annual performances of AmIncome Flexi and its benchmark, AMBB, for the financial period/years ended 31 August. Note: Past performance is not necessarily indicative of future performance and that unit prices and investment returns may go down, as well as up. Strategies and Policies Employed Portfolio Structure Previously, the Fund invested its NAV in a portfolio of domestic and/or foreign sovereign issued bonds and corporate bonds. For domestic bonds, the minimum credit rating was A rated by RAM or MARC s equivalent. For foreign bonds, the minimum credit rating was A rated by their respective local credit rating agencies. This table below is the asset allocation of the Fund for the financial period/year under review. As at % As at % Changes % Foreign corporate bonds Local corporate bonds Cash and others Total The Fund held 100% in cash to meet the Fund s maturity. Distribution/ unit splits State of Affairs There was no income distribution and unit split declared for the financial period under review. There has been neither significant change to the state of affairs of the Fund nor any circumstances that materially affect any interests of the unit holders during the financial period under review. 4

8 Rebates and Soft Commission It is our policy to pay all rebates to the Fund. Soft commissions received from brokers/dealers are retained by the Manager only if the goods and services provided are of demonstrable benefit to unitholders of the Fund. During the financial period under review, the Manager had received on behalf of the Fund, soft commissions in the form of fundamental database, financial wire services, technical analysis software and stock quotation system incidental to investment management of the Fund. These soft commissions received by the Manager are deem to be beneficial to the unitholders of the Fund. Market Review In September 2015, Data released continues to show export data disappointing in many markets but with some glimmers of possible improvement in coming months, with improvement industrial activity and higher imports in markets such as India, Malaysia and to some extent Indonesia. In Malaysia, August 2015 Purchasing Managers Index ( PMI ) at 47.2points (July 2015: 47.7points) indicated contraction a fifth month in-a-row attributed by economists to weak domestic rather than external demand. At the same time, data for Jul 2015 still showed a promising picture of trade with an improvement in imports at 5.9%YoY (expectation: - 0.8%YoY, June 2015: -1.5%YoY) that bodes well for future exports given the continued large composition of intermediate and capital goods in the measure. At the same time exports moderated but continued to grow at 3.5%YoY for July 2015 (expectation: 3.2%YoY, June 2015: 5.0%YoY), with trade narrowing but still in surplus at +2.38billion for July 2015 (expectation: 6.30billion, June 2015: 7.98billion). In October 2015, export data continues to disappoint in many markets but with Malaysia being the notable exception while in India there is some glimmer of possible improvement in coming months, with improvement industrial activity. However, the overriding theme of the data in the month is one of domestic weakness, likely due to the weak external sector beginning to wear down the previously resilient of consumer demand in the region. In Malaysia, trade figures continue to beat expectations with Exports for August 2015 growing 4.1%YoY (expectation: 1.3%YoY, revised July 2015: 3.4%YoY) signalling a potential U- shaped recovery in the external sector. Better exports came from metal products at 41.7%YoY (July 2015: 37.0%YoY), electrical & electronics at 16.7%YoY (July 2015: 12.1%YoY) and machinery & appliances at 12.3%YoY (July 2015: 23.3%YoY). Risks to recovery remain from a weaker than expected growth in China. Imports fell sharply in August 2015 at -6.1%YoY (July 2015: 5.9%YoY), mainly due to lower petrochemicals and crude oil imports. It is a reversal of a jump in imports in July and remains in 2-month zig-zag pattern signalling a 2-month order period for Malaysian manufacturers. In November 2015, GDP numbers for the 3 rd quarter of 2015 released across the region showed resilience in growth in large part due to more competent economic management by financial and economic authorities. However, there is a general trend of weakening in domestic demand as fiscal consolidation measures coupled with still weak external sector beginning to take its toll. In Malaysia, the central bank left the policy rate unchanged at 3.25% for an eighth consecutive bi-monthly meeting. The stance taken by Bank Negara in its Monetary Policy Statement ( MPS ) remains neutral with a slight dovish bias. The MPS stated that at the current level of the Overnight Policy Rate ( OPR ), the stance of monetary policy remains accommodative and supportive of economic activity, but the Monetary Policy Committee recognises that there are heightened risks in the global economic and financial environment. 5

9 Market Outlook The policy statement released after October s The Federal Open Market Committee ( FOMC ) meeting suggests that a rate hike may be just around the corner after the Federal Reserve ( Fed ) flagged that a rate move in its December meeting remains very much a live possibility. The FOMC also upgraded its assessment of the domestic economy and lowered its worries over global headwinds. It would seem that domestic activities would need to slow down significantly in order to hold the Fed back. Given as such, volatility is likely to remain heightened as we move closer to the FOMC meeting in December. On the local front, the domestic economy continues to face multiple headwinds. While the announcement of the sale of 1MDB s Edra Energy to China General Nuclear Power Corporation has somewhat lifted investor sentiment, the impact from the prolonged low global commodity prices coupled with the still weak Ringgit is expected to weigh on the country s outlook in the near term. In addition, the external growth outlook remains uncertain at this juncture with China, despite its aggressive policy stimulus, yet to see signs of a sustained recovery. Furthermore, the anticipated weak domestic demand is already playing out as it is and may continue as consumers adjust to tighter credit conditions and less favourable labour market. Despite the risk factors highlighted above, BNM has continued to view the current monetary policy to be still accommodative and supportive of the domestic economy. While downside risk to growth remains heightened, inflation has been relatively subdued and remained well contained. Given as such, we believe that BNM will likely maintain the OPR at its current level of 3.25% and remain firmly in a wait-and-see mode pending further developments in the global economic scene. Kuala Lumpur, Malaysia AmFunds Management Berhad (formerly known as AmInvestment Services Berhad) 11 December

10 Independent auditors report to the unitholders of AmIncome Flexi Report on the financial statements We have audited the financial statements of AmIncome Flexi ( the Fund ), which comprise the statement of financial position as at 12 November 2015 (date of maturity), the statement of comprehensive income, statement of changes in equity and statement of cash flows for the financial period from 1 September 2015 to 12 November 2015 (date of maturity), and a summary of significant accounting policies and other explanatory notes, as set out on pages 9 to 30. Manager s and Trustee s responsibilities for the financial statements The Manager of the Fund is responsible for the preparation of these financial statements 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 that are free from material misstatement, whether due to fraud or error. The Trustee is responsible for ensuring that the Manager maintains proper accounting and other records as are necessary to enable true and fair presentation of these financial statements. Auditors responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Fund s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by the Manager, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 7

11 Independent auditors report to the unitholders of AmIncome Flexi (cont d.) Opinion As disclosed in Note 2 to the financial statements, the Fund was wound up on 12 November As a result, the Fund has prepared the financial statements for the period from 1 September 2015 to 12 November 2015 on a break-up basis. Accordingly, the carrying values of the assets as at 12 November 2015 are stated at their estimated realisable values and liabilities are recorded to reflect estimated remaining obligations. Provision has also been made for any contractual commitments that have become onerous at the financial position date. In our opinion, the financial statements, which have been prepared on a break-up basis, have been properly drawn up in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards so as to give a true and fair view of the financial position of the Fund as at 12 November 2015 and of its financial performance and cash flows of the Fund for the financial period from 1 September 2015 to 12 November Other matters This report is made solely to the unitholders of the Fund, as a body, and for no other purpose. We do not assume responsibility to any other person for the content of this report. Ernst & Young AF: 0039 Chartered Accountants Wan Daneena Liza Bt Wan Abdul Rahman No. 2978/03/16(J) Chartered Accountant Kuala Lumpur, Malaysia 11 December

12 AmIncome Flexi STATEMENT OF FINANCIAL POSITION AS AT 12 NOVEMBER 2015 (DATE OF MATURITY) Note ASSETS Investments 4-58,075,481 Deposit with financial institution 5-1,698,167 Cash at banks 62,594, ,660 TOTAL ASSETS 62,594,781 60,364,308 LIABILITIES Amount due to Manager 6 62,569,859 - Amount due to Trustee 7 4,347 2,748 Tax payable 2,302 1,711 Sundry payables and accrued expenses 18,273 8,165 TOTAL LIABILITIES 62,594,781 12,624 EQUITY Unitholders capital 10(a) - 59,202,114 Retained earnings 10(b)(c) - 1,149,570 TOTAL EQUITY 10-60,351,684 TOTAL EQUITY AND LIABILITIES 62,594,781 60,364,308 UNITS IN CIRCULATION 10(a) - 59,156,113 NET ASSET VALUE PER UNIT - EX DISTRIBUTION sen The accompanying notes form an integral part of the financial statements. 9

13 AmIncome Flexi STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL PERIOD FROM 1 SEPTEMBER 2015 TO 12 NOVEMBER 2015 (DATE OF MATURITY) to to Note INVESTMENT INCOME Interest income 660,767 4,091,449 Other income exit penalty 10(a) 3,695 46,886 Net gain from investments: Financial assets at fair value through profit or loss ( FVTPL ) 8 1,888,727 4,284,501 Gross Income 2,553,189 8,422,836 EXPENDITURE Trustee s fee 7 7,611 34,841 Auditors remuneration current financial period/year 2,000 5,000 Auditors remuneration over provision in prior financial year - (1,000) Tax agent s fee current financial period/year 500 3,000 Tax agent s fee under provision in prior financial year Custodian s fee 2,110 20,445 Other expenses 9 13,949 21,861 Total Expenditure 26,170 84,647 NET INCOME BEFORE TAX 2,527,019 8,338,189 LESS: INCOME TAX 12 (185,662) (637,860) NET INCOME AFTER TAX 2,341,357 7,700,329 OTHER COMPREHENSIVE INCOME - - TOTAL COMPREHENSIVE INCOME FOR THE FINANCIAL PERIOD/YEAR 2,341,357 7,700,329 Total comprehensive income comprises the following: Realised income 2,341, ,083 Unrealised gain - 7,133,246 2,341,357 7,700,329 (Forward) 10

14 AmIncome Flexi STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL PERIOD FROM 1 SEPTEMBER 2015 TO 12 NOVEMBER 2015 (DATE OF MATURITY) to to Note Distribution for the financial period/year: Net distribution 13-3,321,604 Gross/net distribution per unit (sen) The accompanying notes form an integral part of the financial statements. 11

15 AmIncome Flexi STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL PERIOD FROM 1 SEPTEMBER 2015 TO 12 NOVEMBER 2015 (DATE OF MATURITY) (Accumulated Unitholders loss)/retained Total capital earnings equity Note At 1 September ,764,974 (3,229,155) 57,535,819 Total comprehensive income for the financial year - 7,700,329 7,700,329 Cancellation of units 10(a) (1,562,860) - (1,562,860) Distributions 13 - (3,321,604) (3,321,604) Balance at 31 August ,202,114 1,149,570 60,351,684 At 1 September ,202,114 1,149,570 60,351,684 Total comprehensive income for the financial period - 2,341,357 2,341,357 Cancellation of units 10(a) (62,693,041) - (62,693,041) Retained earnings as at the date of maturity transferred to unitholders capital 10(a) 3,490,927 (3,490,927) - Balance at 12 November The accompanying notes form an integral part of the financial statements. 12

16 AmIncome Flexi STATEMENT OF CASH FLOWS FOR THE FINANCIAL PERIOD FROM 1 SEPTEMBER 2015 TO 12 NOVEMBER 2015 (DATE OF MATURITY) to to Note CASH FLOWS FROM OPERATING AND INVESTING ACTIVITIES Proceeds from maturity of investments 59,095,547 26,825,334 Interest received 1,529,429 4,279,808 Other income exit penalty 3,695 46,886 Trustee s fee paid (6,012) (34,849) Tax agent s fee paid - (3,000) Custodian s fee paid (2,110) (20,445) Tax paid (185,072) (638,074) Payments for other expenses (6,341) (26,697) Purchase of investments - (26,580,574) Net cash generated from operating and investing activities 60,429,136 3,848,389 CASH FLOWS FROM FINANCING ACTIVITIES Payments for cancellation of units (123,182) (1,562,860) Distributions paid - (3,321,604) Net cash used in financing activities (123,182) (4,884,464) NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 60,305,954 (1,036,075) CASH AND CASH EQUIVALENTS AT BEGINNING OF FINANCIAL PERIOD/YEAR 2,288,827 3,324,902 CASH AND CASH EQUIVALENTS AT END OF FINANCIAL PERIOD/YEAR 62,594,781 2,288,827 Cash and cash equivalents comprise: Deposit with financial institution 5-1,698,167 Cash at banks 62,594, ,660 62,594,781 2,288,827 The accompanying notes form an integral part of the financial statements. 13

17 AmIncome Flexi NOTES TO THE FINANCIAL STATEMENTS 1. GENERAL INFOATION AmIncome Flexi ( the Fund ) was established pursuant to a Deed dated 15 March 2012 as amended by Deeds Supplemental thereto ( the Deed ), between AmFunds Management Berhad (formerly known as AmInvestment Services Berhad) as the Manager, Deutsche Trustees Malaysia Berhad as the Trustee and all unitholders. The Fund is a 3-year close-ended bond fund that aims to provide annual income distribution throughout the duration of the Fund. As provided in the Deed, the accrual period or financial year shall end on 31 August and the units in the Fund were offered for sale for the period from 18 September 2012 (date of commencement) to 1 November 2012 and shall continue its operations until the maturity date on 12 November BASIS OF PREPARATION OF FINANCIAL STATEMENTS At the close of business on 12 November 2015, the Fund had matured and had been wound up. The Fund s financial statements have been prepared on a break-up basis whereby the carrying values of the assets are stated at estimated realisable values and liabilities are recorded to reflect remaining obligations. The financial statements are in accordance with Malaysian Financial Reporting Standards ( MFRS ) as issued by the Malaysian Accounting Standard Board ( MASB ) and are in compliance with International Financial Reporting Standard ( IFRS ). The financial statements of the Fund have been prepared under the historical cost convention, unless otherwise stated in the accounting policies. Standards effective during the financial period The adoption of MFRS which have been effective during the financial period did not have any material financial impact to the financial statements. Standards issued but not yet effective As this is the final set of audited financial statements of the Fund, new MFRS and amendments to MFRS which have been issued by MASB but not yet effective will not be applicable to the Fund in future periods. Goods and Services Tax The Goods and Services Tax ( GST ) was implemented in Malaysia effective 1 April The Fund is classified under Exempt Supply and is therefore not required to register for GST. Effective from 1 April 2015, fees and expenses incurred by the Fund, where relevant, are recognised in the Statement of Comprehensive Income excluding 6% GST charged by the respective suppliers of services. The 6% GST incurred will be recognised as other expenses in the Statement of Comprehensive Income. 14

18 3. SIGNIFICANT ACCOUNTING POLICIES Income recognition Income is recognised to the extent that it is probable that the economic benefits will flow to the Fund and the income can be reliably measured. Income is measured at the fair value of consideration received or receivable. Interest income on fixed income securities and short-term deposits are recognised on an accrual basis using the effective interest method, which includes the accretion of discounts and amortisation of premiums. Income tax Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the tax authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at 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. Functional and presentation currency Functional currency is the currency of the primary economic environment in which the Fund operates that most faithfully represents the economic effects of the underlying transactions. The functional currency of the Fund is Ringgit Malaysia which reflects the currency in which the Fund competes for funds, issues and redeems units. The Fund has also adopted Ringgit Malaysia as its presentation currency. Foreign currency conversion Transactions in currencies other than the Fund s functional currency (foreign currencies) are recorded in the functional currency using exchange rates prevailing at the transaction dates. At each reporting date, foreign currency monetary items are translated into Ringgit Malaysia at exchange rates ruling at the reporting date. All exchange gains or losses are recognised in profit or loss. Statement of cash flows The Fund adopts the direct method in the preparation of the statement of cash flows. Cash equivalents are short-term, highly liquid investments that are readily convertible to cash with insignificant risk of changes in value. Distribution Distributions are at the discretion of the Fund. A distribution to the Fund s unitholders is accounted for as a deduction from realised reserves. A proposed distribution is recognised as a liability in the period in which it is approved. 15

19 Unitholders capital The unitholders capital of the Fund meets the definition of puttable instruments and is classified as equity instruments under MFRS 132 Financial Instruments: Presentation ( MFRS 132 ). Financial assets Financial assets are recognised in the statement of financial position when, and only when, the Fund becomes a party to the contractual provisions of the financial instrument. When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs. The Fund determines the classification of its financial assets at initial recognition, and the categories applicable to the Fund include financial assets at fair value through profit or loss ( FVTPL ) and loans and receivables. (i) Financial assets at FVTPL Financial assets are classified as financial assets at FVTPL if they are held for trading or are designated as such upon initial recognition. Financial assets held for trading by the Fund include fixed income securities acquired principally for the purpose of selling in the near term. Subsequent to initial recognition, financial assets at FVTPL are measured at fair value. Changes in the fair value of those financial instruments are recorded in Net gain or loss on financial assets at fair value through profit or loss. Interest earned element of such instrument is recorded separately in Interest income. Exchange differences, if any, on financial assets at FVTPL are not recognised separately in profit or loss but are included in net gains or net losses on changes in fair value of financial assets at FVTPL. For investments in local fixed income securities, fair value is determined based on the indicative prices from Bond Pricing Agency Malaysia Sdn Bhd plus accrued interest, which includes the accretion of discount and amortisation of premium. For investments in foreign fixed income securities, fair value will be based on indicative prices provided by independent and reputable institutions plus accrued interest. Adjusted cost of investments relates to the purchase cost plus accrued interest, adjusted for amortisation of premium and accretion of discount, if any, calculated over the period from the date of acquisition to the date of maturity of the respective securities as approved by the Manager and the Trustee. Unrealised gains or losses recognised in profit or loss are not distributable in nature. On disposal of investments, the net realised gain or loss on disposal is measured as the difference between the net disposal proceeds and the carrying amount of the investments. The net realised gain or loss is recognised in profit or loss. (ii) Loans and receivables Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. 16

20 Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process. On the maturity date, receivable and cash at banks are stated at the lower of carrying value and estimated realisable value. Impairment of financial assets The Fund assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. (i) Loans and receivables carried at amortised cost To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Fund considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. If any such evidence exists, the amount of impairment loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows discounted at the financial asset s original effective interest rate. The impairment loss is recognised in profit or loss. The carrying amount of the financial asset is reduced through the use of an allowance account. When loans and receivables become uncollectible, they are written off against the allowance account. If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss. Financial liabilities Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability. Financial liabilities, within the scope of MFRS 139, are recognised in the statement of financial position when, and only when, the Fund becomes a party to the contractual provisions of the financial instrument. The Fund s financial liabilities are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest/profit method. On the maturity date, financial liabilities are recorded to reflect estimated remaining obligations. A financial liability is derecognised when the obligation under the liability is extinguished. Gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process. 17

21 Classification of realised and unrealised gains and losses Unrealised gains and losses comprise changes in the fair value of financial instruments for the period and from reversal of prior period s unrealised gains and losses for financial instruments which were realised (i.e. sold, redeemed or matured) during the reporting period. Realised gains and losses on disposals of financial instruments classified at fair value through profit or loss are calculated using the weighted average method. They represent the difference between an instrument s initial carrying amount and disposal amount. Significant accounting estimates and judgments The preparation of the Fund s financial statements requires the Manager to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability in the future. The financial statements of the Fund had been prepared on a break-up basis as it had matured. No major judgments have been made by the Manager in applying the Fund s accounting policies. There are no key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities. 4. INVESTMENTS Financial assets at FVTPL Unquoted fixed income securities in Indonesia - 30,098,106 Unquoted fixed income securities in Malaysia - 27,977,375 The weighted average effective yield on unquoted investments are as follows: - 58,075,481 Effective yield % % Corporate bonds - Indonesia Corporate bonds - Malaysia

22 Analyses of the remaining maturity of unquoted investments as at 12 November 2015 and 31 August 2015 are as follows: Less than 1 year IDR 1 year to 5 years IDR At nominal value: Corporate bonds - Indonesia At nominal value: Corporate bonds - Indonesia 99,500,000,000 - Less than 1 year to 1 year 5 years At nominal value: Corporate bonds - Malaysia At nominal value: Corporate bonds - Malaysia 12,000,000 15,100, DEPOSIT WITH FINANCIAL INSTITUTION At nominal value: Short-term deposit with a licensed bank - 1,698,000 At carrying value: Short-term deposit with a licensed bank - 1,698,167 19

23 The weighted average effective interest rate and average remaining maturity of short-term deposit are as follows: Weighted average effective Remaining interest rate maturity % % Day Day Short-term deposit with a licensed bank AMOUNT DUE TO MANAGER Redemption of units* 62,569,859 - * The amount represents net amount payable to the Manager for units redeemed. The normal credit period in the previous financial year and current financial period for redemption of units is three business days. 7. AMOUNT DUE TO TRUSTEE Trustee s fee was charged at a rate of 0.06% (31 August 2015: 0.06%) per annum on the net asset value of the Fund, calculated on a daily basis subject to a minimum fee of 10,000 per annum. The normal credit period in the previous financial year and current financial period for Trustee s fee payable is one month. 8. NET GAIN FROM INVESTMENTS to to Net gain on financial assets at FVTPL comprised: Net realised loss on sale of investment (184,356) (179) Net realised gain/(loss) on foreign currency exchange 2,386,112 (2,848,566) Net unrealised gain on changes in fair value of investments - 567,352 Net unrealised gain on foreign currency fluctuation of investment denominated in foreign currency - 6,565,894 (Forward) 20

24 to to Reversal of net unrealised loss on changes in fair values of investments 35,124 - Reversal of net unrealised gain on foreign currency fluctation of investments denominated in foreign currency (348,153) - 1,888,727 4,284, OTHER EXPENSES Included in other expenses is Goods and Services Tax incurred by the Fund during the financial period amounting to 1,407 (31 August 2015: 1,193). 10. TOTAL EQUITY Total equity is represented by: Note Unitholders capital (a) - 59,202,114 Retained earnings Realised income (b) - 836,541 Unrealised gain (c) - 313,029 (a) UNITHOLDERS CAPITAL/UNITS IN CIRCULATION - 60,351, Number of Number of units units At beginning of the financial period/year 59,156,113 59,202,114 60,764,503 60,764,974 Cancellation during the financial period/year (59,156,113) (62,693,041) (1,608,390) (1,562,860) Retained earnings gain as at the date of maturity transferred from distributable earnings [Note 10(b)] - 3,490, At end of the financial period/year ,156,113 59,202,114 21

25 As provided in the Deed, the Manager shall charge an exit penalty not exceeding 3.00% on the net asset value per unit of the Fund for any withdrawal request made anytime before maturity date and nil for any withdrawal made on maturity date. The exit penalty shall be placed back to the Fund. The Manager charged an exit penalty fee of 3.00% (31 August 2015: 3.00%) on the net asset value per unit of the Fund for the financial period ended 12 November (b) REALISED DISTRIBUTABLE At beginning of the financial period/year 836,541 3,591,062 Total comprehensive income for the financial period/year 2,341,357 7,700,329 Net unrealised gain attributable to investments held transferred to unrealised reserve [Note 10(c)] - (7,133,246) Net unrealised gain transferred from unrealised reserve upon disposal of investments [Note 10(c)] 313,029 - Distribution out of realised reserve (Note 13) - (3,321,604) Retained earnings as at the date of maturity transferred to unitholders capital [Note 10(a)] (3,490,927) - Net decrease in realised reserve for the financial period/year (836,541) (2,754,521) At end of the financial period/year - 836,541 (c) UNREALISED NON-DISTRIBUTABLE At beginning of the financial period/year 313,029 (6,820,217) Net unrealised gain attributable to investments held transferred from realised reserve [Note 10(b)] - 7,133,246 Net unrealised gain transferred to realised reserve upon disposal of investments [Note 10(b)] (313,029) - At end of the financial period/year - 313, UNITS HELD BY RELATED PARTIES The Manager and parties related to the Manager did not hold any units in the Fund as at 12 November 2015 (date of maturity) and 31 August

26 12. INCOME TAX to to Current financial period/year - local tax ,185 Current financial period/year - foreign tax 185, ,627 (Over)/under provision of tax in prior financial years (26) , ,860 Income tax payable is calculated on investment income less deduction for permitted expenses as provided for under Section 63B of the Income Tax Act, Pursuant to Schedule 6 of the Income Tax Act, 1967, interest income derived by the Fund is exempted from tax. A reconciliation of income tax expense applicable to net income before tax at the statutory income tax rate to income tax expense at the effective income tax rate of the Fund is as follows: to to Net income before tax 2,527,019 8,338,189 Taxation at Malaysian statutory rate of 24% ( :25%) 606,485 2,084,547 Tax effects of: Income not subject to tax (643,323) (1,965,696) Effect of different tax rate in other countries 88,714 (213,850) Loss not deductible for tax purposes 127, ,186 Restriction on tax deductible expenses for unit trust fund 2,433 4,827 Non-permitted expenses for tax purposes 3,577 15,798 Under provision of tax in prior financial years (26) 48 Tax expense for the financial period/year 185, , DISTRIBUTIONS Distributions to unitholders declared on 12 December 2014 for the previous financial year are from the following sources: 23

27 to to Interest income - 3,998,186 Other income exit penalty - 45,925-4,044,111 Less: Expenses - (84,647) Tax - (637,860) Total amount of distribution - 3,321,604 Gross/net distribution per unit (sen) Distribution made out of: - Realised reserve [Note 10(b)] - 3,321,604 Comprising: Cash distribution - 3,321, MANAGEMENT EXPENSE RATIO ( MER ) The Fund s MER is as follows: to to % p.a. % p.a. Trustee s fee Fund s other expenses Total MER The MER of the Fund is the ratio of the sum of annualised fees and expenses incurred by the Fund to the average net asset value of the Fund calculated on a daily basis. 15. PORTFOLIO TURNOVER RATIO ( PTR ) The PTR of the Fund, which is the ratio of average total acquisitions and disposals of investments to the average net asset value of the Fund calculated on a daily basis, is 0.48 times (31 August 2015: 0.46 times). 24

28 16. SEGMENTAL REPORTING The Manager and Investment Committee of the Fund are responsible for allocating resources available to the Fund in accordance with the overall investment strategies as set out in the Investment Guidelines of the Fund. The Fund is managed by two segments: - A portfolio of foreign fixed income instruments; and - A portfolio of local fixed income instruments, including deposit with financial institution. The investment objective of each segment is to achieve consistent returns from the investments in each segment while safeguarding capital by investing in diversified portfolios. There have been no changes in reportable segments in the current financial period. The segment information provided is presented to the Manager and Investment Committee of the Fund. Foreign Local Foreign Local fixed fixed fixed fixed income income income income portfolio portfolio Total portfolio portfolio Total Interest income 401, , ,767 3,361, ,542 4,091,449 Net gain/(loss) from investments Financial assets at FVTPL 2,002,332 (113,605) 1,888,727 4,350,076 (65,575) 4,284,501 Total segment investment income for the financial period/year 2,403, ,671 2,549,494 7,711, ,967 8,375,950 Financial assets at FVTPL ,098,106 27,977,375 58,075,481 Deposits with financial institutions ,698,167 1,698,167 Total segment assets ,098,106 29,675,542 59,773,648 There were no segment liabilities as at 12 November 2015 and 31 August Expenses of the Fund are not considered part of the performance of any investment segment. The following table provides reconciliation between the net reportable segment income and net income after tax: 25

29 to to Net reportable segment investments income 2,549,494 8,375,950 Other income exit penalty 3,695 46,886 Less: Expenses (26,170) (84,647) Net income before tax 2,527,019 8,338,189 Less: Income tax (185,662) (637,860) Net income after tax 2,341,357 7,700,329 In addition, certain assets and liabilities are not considered to be part of the net assets or liabilities of an individual segment. The following table provides reconciliation between the net reportable segment assets and liabilities and total assets and liabilities of the Fund to to Total segment assets - 59,773,648 Cash at banks 62,594, ,660 Total assets of the Fund 62,594,781 60,364,308 Total segment liabilities - - Amount due to Manager 62,569,859 - Amount due to Trustee 4,347 2,748 Tax payable 2,302 1,711 Sundry payables and accrued expenses 18,273 8,165 Total liabilities of the Fund 62,594,781 12, TRANSACTIONS WITH FINANCIAL INSTITUTIONS Details of transactions with financial institutions for the financial period ended 12 November are as follows: Financial institutions Transaction value % Public Bank Berhad 180,883, RHB Bank Berhad 128,541, CIMB Bank Berhad 43,032, RHB Investment Bank Berhad 28,779, Malayan Banking Berhad 24,057, Total 405,294,

30 There was no transaction with financial institutions related to the Manager. The above transactions were in respect of fixed income instruments and money market deposits. Transactions in these investments do not involve any commission or brokerage. 18. FINANCIAL INSTRUMENTS (a) Classification of financial instruments The significant accounting policies in Note 3 describe how the classes of financial instruments are measured, and how income and expenses, including fair value gains and losses, are recognised. The following table analyses the financial assets and liabilities of the Fund in the statement of financial position by the class of financial instrument to which they are assigned, and therefore by the measurement basis. Loans and Financial Financial receivables liabilities at assets at amortised amortised at FVTPL cost* cost# Total 12 November 2015 Assets Cash at banks - 62,594,781-62,594,781 Total financial assets - 62,594,781-62,594,781 Liabilities Amount due to Manager ,569,859 62,569,859 Amount due to Trustee - - 4,347 4,347 Sundry payables and accrued expenses ,273 18,273 Total financial liabilities ,592,479 62,592,479 * equivalent to estimated realisable values # equivalent to estimated remaining obligations Loans and Financial Financial receivables liabilities at assets at amortised amortised at FVTPL cost cost Total 31 August 2015 Assets Investments 58,075, ,075,481 Deposit with financial institution - 1,698,167-1,698,167 (Forward) 27

31 Loans and Financial Financial receivables liabilities at assets at amortised amortised at FVTPL cost cost Total Cash at bank - 590, ,660 Total financial assets 58,075,481 2,288,827-60,364,308 Liabilities Amount due to Trustee - - 2,748 2,748 Sundry payables and accrued expenses - - 8,165 8,165 Total financial liabilities ,913 10,913 Income, expense, gains and losses to to Net gain from financial assets at FVTPL 1,888,727 4,284,501 Income, of which derived from: Interest income from financial assets at FVTPL 610,923 4,034,214 Interest income from loans and receivables 49,844 57,235 (b) Financial instruments that are carried at fair value The Fund s financial assets and liabilites at FVTPL are carried at fair value. The Fund uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: Level 1: Level 2: Level 3: quoted (unadjusted) prices in active markets for identical assets or liabilities; other techniques for which all inputs which have a significant effect on the recorded fair values are observable; either directly or indirectly; or techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data. The following table shows an analysis of financial instruments recorded at fair value by the level of the fair value hierarchy: 28

32 Level 1 Level 2 Level 3 Total 12 November 2015 Financial assets at FVTPL 31 August 2015 Financial assets at FVTPL ,075,481-58,075,481 (c) Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value due to their short period to maturity or short credit period: Deposit with financial institution Cash at banks Amount due to Manager Amount due to Trustee Sundry payables and accrued expenses There were no financial instruments which are not carried at fair values and whose carrying amounts are not reasonable approximation of their respective fair values. 19. RISK MANAGEMENT POLICIES Prior to its maturity, the Fund was exposed to a variety of risks including credit risk and liquidity risk. Throughout the period, risk management was carried out by closely monitoring, measuring and mitigating the above said risks, coupled with stringent compliance to investment restrictions as stipulated by the Capital Market and Services Act 2007, Securities Commission s Guidelines on Unit Trust Funds and the Deed as the backbone of risk management of the Fund. Credit risk For cash in bank and deposits with financial institutions, the Fund only makes placements with financial institutions with sound rating. Credit risk at the maturity date relates solely to the cash at banks. As of 12 November 2015, the banks have a credit rating of P1/MARC-1 as rated by Rating Agency Malaysia. 29

33 Liquidity risk At the maturity date, the Fund maintains a sufficient level of liquid assets, after consultation with the Trustee, to meet anticipated payments. Liquid assets comprise of deposits with licensed financial institutions and other instruments, which are capable of being converted into cash within 5 to 7 days. The Fund s policy is to always maintain a prudent level of liquid assets so as to reduce liquidity risk. 20. CAPITAL MANAGEMENT The primary objective of the Fund s capital management is to ensure that it maximises unitholders value by expanding its fund size to benefit from economies of scale and achieving growth in net asset value from the performance of its investments. The Fund no longer raises any new capital after its maturity date. 21. COMPARATIVES The comparative figures for the statement of financial position, statement of comprehensive income, statement of changes in equity and the statement of cash flows are not of comparable date or period as the Fund s maturity date on 12 November 2015 is different from its financial year end on 31 August