AmAustraliaAnnual Report for

31 July 2017

AmAustralia

TRUST DIRECTORY

Manager

AmFunds Management Berhad

9th

& 10th

Floor, Bangunan AmBank Group

55 Jalan Raja Chulan

50200 Kuala Lumpur

Board of Directors

Raja Teh Maimunah Raja Abdul Aziz

Mustafa Mohd Nor

Tai Terk Lin

Goh Wee Peng

Sum Leng Kuang

Investment Committee

Sum Leng Kuang

Tai Terk Lin

Mustafa Mohd Nor

Zainal Abidin Mohd Kassim

Trustee

Deutsche Trustees Malaysia Berhad

Auditors and Reporting Accountants

Ernst & Young

Taxation Adviser

Deloitte Tax Services Sdn Bhd

AmAustralia

CONTENTS

1 Manager’s Report

7 Independent Auditor’s Report to the Unitholders

10 Statement of Financial Position

11 Statement of Comprehensive Income

13 Statement of Changes in Equity

14 Statement of Cash Flows

15 Notes to the Financial Statements

35 Statement by the Manager

36 Trustee’s Report

37 Directory

1

MANAGER’S REPORT

Dear Unitholders,

We are pleased to present you the Manager’s report and the audited accounts of AmAustralia (“Fund”)

for the financial year ended 31 July 2017.

We wish to inform that, for the financial period under review, the AUD Class had not garnered sales.

Salient Information of the Fund

Name AmAustralia (“Fund”)

Category/

Type

Mixed Asset / Income & Capital Growth

Objective The Fund seeks to provide income* and Long-Term** capital growth by investing

in Australian equities and Australian dollar fixed income securities.

Note: The Fund’s main focus is on income and to a lesser extent, capital growth.

*The income could be in the form of units or cash.

**Long Term refer to an investment horizon between five (5) to ten (10) years.

Duration The Fund was established on 15 March 2011 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.

Performance

Benchmark 75% S&P/ASX 200 Accumulation Index

25% Citi Australian Broad Investment-Grade Bond Index

(obtainable via www.aminvest.com)

This amendment to the performance benchmark of AmAustralia is made to enable

the Investment Manager to better match the investment universe and performance of

the Fund.

Income

Distribution

Policy

MYR Class

The Manager intends to distribute all or part of the income earned as income

distribution. The income distribution (if any) is paid once a year and will be paid in

the form of cash or units.

AUD Class

The Manager intends to distribute all or part of the income earned as income

distribution. The income distribution (if any) is paid once a year and will be

reinvested into additional units of the Class.

Note: Income distribution amount (if any) for each of the Classes would be different

subject to sole discretion of the Manager.

2

Breakdown

of Unit

Holdings by

Size

For the financial year under review, the size of the Fund for MYR class stood at

3,579,722 units.

Size of holding As at 31 July 2017 As at 31 July 2016

No of units

held

Number of

unitholders

No of units

held

Number of

unitholders

5,000 and below - - 60,018 19

5,001-10,000 - - 93,918 11

10,001-50,000 43,551 2 677,928 30

50,001-500,000 - - 686,572 6

500,001 and above 3,536,171 2 1,911,811 2

Fund Performance Data

Portfolio

Composition

Details of portfolio composition of the Fund for the financial years as at 31 July

are as follows:

FY

2017

%

FY

2016

%

FY

2015

%

Consumer discretionary - 4.84 6.90

Consumer staples - 3.82 2.25

Communications - 7.15 7.45

Energy - - 3.36

Financial - 21.21 33.63

Healthcare - 6.00 8.86

Industrial - 3.12 5.32

Materials - 20.25 14.21

Real estate/Properties - 2.63 1.92

REITs - 10.94 2.82

Cash and others 100.00 20.04 13.28

Total 100.00 100.00 100.00

Note: The abovementioned percentages are calculated based on total net asset

value.

Performance

Details

Performance details of the Fund for the financial years ended 31 July are as

follows:

FY

2017

FY

2016

FY

2015

Net asset value (RM) 2,026,671 1,957,443* 3,007,941

Units in circulation 3,579,722 3,430,247* 5,321,135

Net asset value per unit (RM) 0.5662 0.5706* 0.5653

Highest net asset value per unit

(RM) 0.6083 0.5915* 0.6119

Lowest net asset value per unit

(RM) 0.5410 0.5071* 0.5193

Benchmark performance (%) 17.39 14.14 -0.53

(Forward)

3

FY

2017

FY

2016

FY

2015

Total return (%)(1)

-0.77 9.24 -1.33

- Capital growth (%) -0.77 1.28 -1.33

- Income distribution (%) - 7.96 -

Gross distribution (sen per unit) - 4.50 -

Net distribution (sen per unit) - 4.50 -

Management expense ratio

(%)(2)

4.64 3.93

2.84

Portfolio turnover ratio

(times)(3)

1.64 1.34

1.00

* Above prices and net asset value per unit are shown as ex-distribution.

Note:

(1) Total return is the actual return of the Fund for the respective financial years

computed based on the net asset value per unit and net of all fees.

(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 0.71% as compared to 3.93% per annum

for the financial year ended 31 July 2016 mainly due to increase in expenses.

(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 0.30 times (22.4%) as compared to 1.34 times for the financial

year ended 31 July 2016 mainly due to increase in investing activities.

(4) There were no units in circulation for AUD class since the launching of the

class on 10 September 2014.

Average Total Return (as at 31 July 2017)

MYR class

AmAustralia(a)

%

ASA51 Index and

ACMPALL Index/

CABIGB Index(b)

%

One year -0.77 17.39

Three years 2.27 9.81

Five years 4.53 10.19

Since launch (15 March 2011) 3.54 9.90

Annual Total Return

Financial Years Ended

(31 July)

MYR class

AmAustralia(a)

%

ASA51 Index and

ACMPALL Index/

CABIGB Index(b)

%

2017 -0.77 17.39

2016 9.24 14.14

2015 -1.33 -0.53

2014 15.78 16.60

2013 0.75 5.49

(Forward)

4

(a) Source: Novagni Analytics and Advisory Sdn Bhd.

(b) Until 1 December 2014 –

75% S&P/ASX 200 Accumulation Index (“ASA51 Index”) and 25% UBS

Australian Composite Bond Index (“ACMPALL Index”)

Effective from 2 December 2014 onwards –

–25% Citi Australian Broad Investment-Grade Bond Index Australian

Composite Bond Index (“CABIGB Index”) (Obtainable via:

www.aminvest.com). CABIGB Index has replaced ACMPALL Index

(c) There was no return for AUD class since the launching of the class on 10

September 2014.

The Fund’s performance is calculated based on net asset value per unit of the

Fund. Average total returns of the Fund and its benchmark for a period are

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

MYR class

For the financial year under review, the Fund registered a negative return of 0.77%

which was entirely capital in nature.

Thus, the Fund’s negative return of 0.77% has underperformed the benchmark’s

return of 17.39% by 18.16%.

As compared with the financial year ended 31 July 2016, the net asset value

(“NAV”) per unit of the Fund decreased by 0.77% from RM0.5706 to RM0.5662,

while units in circulation increased by 4.36% from 3,430,247 units to 3,579,722

units.

AUD class

For the financial period under review, there was no return for the AUD class.

The line chart below shows comparison between the annual performances of

AmAustralia (MYR class) and its benchmark, 75% S&P/ASX 200 Accumulation

Index (“ASA51 Index”) and 25% City Australian Broad Index-Grade Bond Index

(“CABIGB Index”), for the financial years ended 31 July.

(Forward)

5

Note: Past performance is not necessarily indicative of future performance

and that unit prices and investment returns may go down, as well as up.

Has the Fund

achieved its

objective?

The Fund achieved its objective through capital growth by investing in Australian

equities and Australian dollar fixed income securities.

Strategies

and Policies

Employed

For the financial year under review, the Fund may invest in a mix of Australian

equities and Australian dollar fixed income securities. The Fund generally

maintains equity exposure within a range of 50% to 100% of the Fund’s NAV. If

the Fund’s NAV is not fully invested in equities, the balance of the Fund’s NAV

may be invested in Australian dollar fixed income securities and liquid assets. The

Fund derives its income primarily through investments in relatively higher paying

dividend stocks. It may also invest in growth stocks to participate in an actual or

anticipated stock market rally.

The Manager is responsible for managing the Australian equities and Australian

dollar fixed income securities of the Fund, and will be responsible for managing

the liquidity of the Fund.

Portfolio

Structure

This table below is the asset allocation of the Fund for MYR class for the financial

years under review.

As at

31-7-2017

%

As at

31-7-2016

%

Changes

%

Consumer discretionary - 4.84 -4.84

Consumer staples - 3.82 -3.82

Communications - 7.15 -7.15

Financial - 21.21 -21.21

Healthcare - 6.00 -6.00

Industrial - 3.12 -3.12

Materials - 20.25 -20.25

(Forward)

6

As at

31-7-2017

%

As at

31-7-2016

%

Changes

%

Real estate/Properties - 2.63 -2.63

REITs - 10.94 -10.94

Cash and others 100.00 20.04 79.96

Total 100.00 100.00

For the financial year under review, the allocation in cash as at 31 July 2016 was

100% following liquidation of investment holdings at end-June 2017. The cash is

being placed in overnight money markets until closing of the fund by calendar

year-end 2017.

Distribution/

Unit splits

There was no income distribution and unit split declared for the financial year

under review.

State of

Affairs

Board approval was obtained in order to close the Fund by year-end. As such, the

necessary steps are being taken to prepare for this, including obtaining

unitholders’ approval via an Extraordinary General Meeting.

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 year 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 deemed to be beneficial to the unitholders of the Fund.

Market

Review

The ASX lagged world indices in July for the fourth consecutive month due to the

deterioration in earnings expectations for Banks (underwhelming results), Retail

and Mining (drop in bulk and base prices). Materials were the best performing

sector in July (+3.6%).

Market

Outlook

Mining is back in focus despite peaking commodity prices as investors focus on

free cash flows of mining companies. Consumer and retail-related stocks are likely

to be impacted by the imminent arrival of Amazon and the long term implications

on businesses as well as valuations. Corporates are facing cost pressures from

higher input costs (energy and electricity). Benign inflation, high energy costs,

household debt and the strengthening of the Australia Dollar (which would be

damaging to the economy) are factors likely holding back the Reserve Bank of

Australia from raising rates sooner rather than later.

Kuala Lumpur, Malaysia

AmFunds Management Berhad

7 September 2017

Independent auditors’ report to the unitholders of

AmAustralia

Report on the audit of the financial statements

Opinion

Basis for opinion

Independence and other ethical responsibilities

Information other than the financial statements and auditors’ report thereon

We have audited the financial statements of AmAustralia (“the Fund”), which comprise the

statement of financial position as at 31 July 2017, and the statement of comprehensive income,

statement of changes in equity and statement of cash flows for the year then ended, and notes to the

financial statements, including a summary of significant accounting policies, as set out on pages 10

to 34.

In our opinion, the accompanying financial statements give a true and fair view of the financial

position of the Fund as at 31 July 2017, and of its financial performance and its cash flows for the

year then ended in accordance with Malaysian Financial Reporting Standards and International

Financial Reporting Standards.

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 Auditor’s 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.

We are independent of the Fund in accordance with the By-Laws (on Professional Ethics, Conduct

and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics

Standards Board for Accountants’ Code of Ethics for Professional Accountants (“IESBA Code”),

and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the

IESBA Code.

The Manager is responsible for the other information. The other information comprises information

in the Annual Report, but does not include the financial statements of the Fund and our auditors’

report thereon.

Our opinion on the financial statements of the Fund does not cover the other information and we do

not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements of the Fund, our responsibility is to read the

other information and, in doing so, consider whether the other information is materially inconsistent

with the financial statements of the Fund or our knowledge obtained in the audit or otherwise

appears to be materially misstated.

7

Independent auditors’ report to the unitholders of

AmAustralia (cont’d.)

Responsibilities of the Manager and the Trustees for the financial statements

Auditor’s responsibilities for the audit of the financial statements

In preparing the financial statements of the Fund, the Manager is responsible for assessing the

Fund’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 intends to

liquidate the Fund or to cease operations, or has no realistic alternative to do so.

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.

Our objectives are to obtain reasonable assurance about whether the financial statements of the Fund,

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 approved standards on auditing in Malaysia

and International Standards on Auditing will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the

aggregate, they could reasonably be expected to influence the economic decisions of users taken on

the basis of these financial statements.

As part of an audit in accordance with the approved standards on auditing in Malaysia and

International Standards on Auditing, we exercise professional judgment and maintain professional

skepticism throughout the planning and performance of the audit. We also:

Identify and assess the risks of material misstatement of the financial statements of the Fund,

whether due to fraud or error, design and perform audit procedures responsive to those risks,

and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.

The risk of not detecting a material misstatement resulting from fraud is higher than for one

resulting from error, as fraud may involve collusion, forgery, intentional omissions,

misrepresentations, or the override of internal control.

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 Fund’s internal control.

If based on the work we have performed, we conclude that there is a material misstatement of this

other information, we are required to report that fact. We have nothing to report in this regard.

The Manager is responsible for the preparation of the financial statements of the Fund that give a

true and fair view in accordance with Malaysian Financial Reporting Standards and International

Financial Reporting Standards. The Manager is also responsible for such internal control as the

Manager determines is necessary to enable the preparation of financial statements of the Fund that

are free from material misstatement, whether due to fraud or error.

8

Independent auditors’ report to the unitholders of

AmAustralia (cont’d.)

Other matters

Ernst & Young Wan Daneena Liza Bt Wan Abdul Rahman

AF: 0039 No. 2978/03/18(J)

Chartered Accountants Chartered Accountant

Kuala Lumpur, Malaysia

7 September 2017

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.

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 Fund’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

or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the

audit evidence obtained up to the date of our auditors’ report. However, future events or

conditions may cause the Fund to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the financial statements of the

Fund, including the disclosures, and whether the financial statements of the Fund represent

the underlying transactions and events in a manner that 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.

9

AmAustralia

STATEMENT OF FINANCIAL POSITION

AS AT 31 JULY 2017

2017 2016

Note RM RM

ASSETS

Investments 4 - 1,565,232

Deposits with financial institutions 5 2,040,372 -

Amount due from Manager 6 - 1,876

Dividends receivable - 2,278

Sundry receivables 7 - 87,638

Cash at banks 4,394 350,007

TOTAL ASSETS 2,044,766 2,007,031

LIABILITIES

Amount due to Manager 6 4,647 -

Amount due to Trustee 8 849 792

Distributions payable - 355

Sundry payables and accrued expenses 7 12,599 48,441

TOTAL LIABILITIES 18,095 49,588

EQUITY

Unitholders’ capital 11(a) 522,350 604,554

Retained earnings 11(b)(c) 1,504,321 1,352,889

TOTAL EQUITY 11 2,026,671 1,957,443

TOTAL EQUITY AND LIABILITIES 2,044,766 2,007,031

UNITS IN CIRCULATION 11(a) 3,579,722 3,430,247

NET ASSET VALUE PER UNIT

– EX DISTRIBUTION 56.62 sen 57.06 sen

The accompanying notes form an integral part of the financial statements.

10

AmAustralia

STATEMENT OF COMPREHENSIVE INCOME

FOR THE FINANCIAL YEAR ENDED 31 JULY 2017

2017 2016

Note RM RM

INVESTMENT INCOME

Gross dividend income 77,010 96,544

Interest income 48,181 1,752

Net gain from investments:

− Financial assets at fair value through profit or

loss (“FVTPL”) 9 207,921 184,367

Other unrealised foreign exchange (loss)/gain (67) 225

Gross Income 333,045 282,888

EXPENDITURE

Manager’s fee 6 (69,417) (42,509)

Trustee’s fee 8 (10,055) (9,945)

Auditors’ remuneration (7,500) (7,000)

Tax agent’s fee – current financial year (4,100) (2,000)

Tax agent’s fee – under provision in prior financial year (2,000) -

Custodian’s fee (71,078) (23,175)

Other expenses 10 (14,634) (8,074)

Total Expenditure (178,784) (92,703)

NET INCOME BEFORE TAX 154,261 190,185

LESS: INCOME TAX 13 (2,829) (1,255)

NET INCOME AFTER TAX 151,432 188,930

OTHER COMPREHENSIVE INCOME - -

TOTAL COMPREHENSIVE INCOME FOR THE

FINANCIAL YEAR 151,432 188,930

Total comprehensive income comprises the following:

Realised income 421,609 58,551

Unrealised (loss)/gain (270,177) 130,379

151,432 188,930

(Forward)

11

AmAustralia

STATEMENT OF COMPREHENSIVE INCOME

FOR THE FINANCIAL YEAR ENDED 31 JULY 2017 (CONTʼD.)

2017 2016

Note RM RM

Distributions for the financial year:

Net distributions 14 - 175,487

Gross/net distributions per unit (sen) 14 - 4.50

The accompanying notes form an integral part of the financial statements.

12

AmAustralia

STATEMENT OF CHANGES IN EQUITY

FOR THE FINANCIAL YEAR ENDED 31 JULY 2017

Unitholders’ Retained Total

capital earnings equity

Note RM RM RM

At 1 August 2015 1,668,495 1,339,446 3,007,941

Total comprehensive income for

the financial year - 188,930 188,930

Creation of units 11(a) 532,940 - 532,940

Reinvestments of distributions 11(a),14 174,848 - 174,848

Cancellation of units 11(a) (1,771,729) - (1,771,729)

Distributions 14 - (175,487) (175,487)

Balance at 31 July 2016 604,554 1,352,889 1,957,443

At 1 August 2016 604,554 1,352,889 1,957,443

Total comprehensive income for

the financial year - 151,432 151,432

Creation of units 11(a) 17,986,543 - 17,986,543

Cancellation of units 11(a) (18,068,747) - (18,068,747)

Balance at 31 July 2017 522,350 1,504,321 2,026,671

The accompanying notes form an integral part of the financial statements.

13

AmAustralia

STATEMENT OF CASH FLOWS

FOR THE FINANCIAL YEAR ENDED 31 JULY 2017

2017 2016

Note RM RM

CASH FLOWS FROM OPERATING AND

INVESTING ACTIVITIES

Proceeds from sale of investments 7,242,517 3,802,111

Dividends received 76,392 99,113

Interest received 48,181 1,752

Manager’s fee paid (67,454) (44,433)

Trustee’s fee paid (9,998) (10,002)

Tax agent’s fee paid (4,000) (4,000)

Custodian’s fee paid (71,078) (23,175)

Payments for other expenses (20,863) (15,640)

Purchase of investments (5,420,939) (2,575,770)

Net cash generated from operating and

investing activities 1,772,758 1,229,956

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from creation of units 17,991,103 528,380

Payments for cancellation of units (18,068,747) (1,779,747)

Distributions paid (355) (284)

Net cash used in financing activities (77,999) (1,251,651)

NET INCREASE/(DECREASE) IN CASH

AND CASH EQUIVALENTS 1,694,759 (21,695)

CASH AND CASH EQUIVALENTS AT

BEGINNING OF FINANCIAL YEAR 350,007 371,702

CASH AND CASH EQUIVALENTS AT

END OF FINANCIAL YEAR 2,044,766 350,007

Cash and cash equivalents comprise:

Deposits with financial institutions 5 2,040,372 -

Cash at banks 4,394 350,007

2,044,766 350,007

The accompanying notes form an integral part of the financial statements.

14

AmAustralia

NOTES TO THE FINANCIAL STATEMENTS

1. GENERAL INFORMATION

2. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

Standards effective during the financial year

Standards issued but not yet effective

Effective for

financial periods

beginning on or after

MFRS 9: Financial Instruments

MFRS 15: Revenue From Contracts With Customers 1 January 2018

The financial statements of the Fund have been prepared in accordance with Malaysian Financial

Reporting Standards (“MFRS”) as issued by the Malaysian Accounting Standards Board

(“MASB”) and are in compliance with International Financial Reporting Standards.

The adoption of MFRS which have been effective during the financial year did not have any

material financial impact to the financial statements.

The Fund was set up with the objective to provide income and long-term capital growth by

investing in Australian equities and Australian dollar fixed income securities. As provided in the

Deed, the “accrual period” or financial year shall end on 31 July and the units in the Fund for MYR

Class and AUD Class were first offered for sale on 15 March 2011 and 10 September 2014

respectively. There were no units in circulation for the AUD Class since its offer date.

AmAustralia (“the Fund”) was established pursuant to a Deed dated 23 July 2010 as amended by

Deeds Supplemental thereto (“the Deed”), between AmFunds Management Berhad as the

Manager, Deutsche Trustees Malaysia Berhad as the Trustee and all unitholders.

As at the date of authorisation of these financial statements, the following Standards, which are

relevant to the Fund, have been issued by MASB but are not yet effective and have not been

adopted by the Fund.

The Fund plans to adopt the above pronouncements when they become effective in the respective

financial periods. These pronouncements are expected to have no significant impact to the financial

statements of the Fund upon their initial application except as described below:

1 January 2018

The financial statements of the Fund have been prepared under the historical cost convention,

unless otherwise stated in the accounting policies.

15

MFRS 9 Financial Instruments

3. SIGNIFICANT ACCOUNTING POLICIES

Income recognition

Income tax

Functional and presentation currency

Foreign currency transactions

Statement of cash flows

The Fund adopts the direct method in the preparation of the statement of cash flows.

MFRS 9 reflects International Accounting Standards Board’s (“IASB”) work on the replacement of

MFRS 139 Financial Instruments: Recognition and Measurement (“MFRS 139”). MFRS 9 will be

effective for financial year beginning on or after 1 January 2018. The Fund is in the process of

quantifying the impact of the first adoption of MFRS 9.

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.

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.

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.

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.

Cash equivalents are short-term, highly liquid investments that are readily convertible to cash with

insignificant risk of changes in value.

Dividend income is recognised when the Fund’s right to receive payment is established. Interest

income on short-term deposits is recognised on an accrual basis using the effective interest method.

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.

16

Distribution

Unitholders’ capital

Financial assets

(i) Financial assets at FVTPL

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.

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.

Distributions are at the discretion of the Fund. A distribution to the Fund’s unitholders is accounted

for as a deduction from realised reserve. A proposed distribution is recognised as a liability in the

period in which it is approved.

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’. Dividend revenue and interest earned

elements of such instruments are recorded separately in ‘Gross dividend income’ and ‘Interest

income’ respectively. 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.

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”).

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.

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 equity securities acquired principally for the purpose of selling in the near term.

For investments in foreign listed securities, which are quoted in the respective stock

exchanges, market value will be determined based on the published market price quoted by the

respective stock exchanges at the end of each business day. Unrealised gains or losses

recognised in profit or loss are not distributable in nature.

17

(ii) Loans and receivables

Impairment of financial assets

(i) Loans and receivables carried at amortised cost

Financial liabilities

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.

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.

Financial assets with fixed or determinable payments that are not quoted in an active market

are classified as loans and receivables.

The Fund assesses at each reporting date whether there is any objective evidence that a financial

asset is impaired.

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.

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 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 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 method.

Financial liabilities are classified according to the substance of the contractual arrangements

entered into and the definitions of a financial liability.

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.

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.

18

Classification of realised and unrealised gains and losses

Significant accounting estimates and judgments

4. INVESTMENT

2017 2016

RM RM

Financial assets at FVTPL

Quoted equity securities in Australia - 1,565,232

5. DEPOSITS WITH FINANCIAL INSTITUTIONS

2017 2016

RM RM

At nominal value:

Short-term deposits with licensed banks 1,432,200 -

Short-term deposits with licensed Islamic banks 608,000 -

2,040,200 -

(Forward)

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.

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 within the next financial year.

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.

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 Fund classifies its investments as financial assets at FVTPL as the Fund may sell its

investments in the short-term for profit-taking or to meet unitholders’ cancellation of units.

19

2017 2016

RM RM

At carrying value:

Short-term deposits with licensed banks 1,432,321 -

Short-term deposits with licensed Islamic banks 608,051 -

2,040,372 -

Details of deposits with financial institutions as at 31 July 2017 are as follows:

Carrying

value as a

percentage

Nominal Carrying Purchase of net asset

value value cost value

RM RM RM %

Short-term deposits with licensed banks

01.08.2017 CIMB Bank

Berhad 304,000 304,025 304,000 15.00

01.08.2017 Hong Leong

304,000 304,025 304,000 15.00

01.08.2017

Banking

Berhad 304,000 304,027 304,000 15.00

01.08.2017

Berhad 304,000 304,027 304,000 15.00

01.08.2017

Bank

(Malaysia)

Bhd. 216,200 216,217 216,200 10.67

1,432,200 1,432,321 1,432,200 70.67

Short-term deposits with licensed Islamic banks

01.08.2017 CIMB Islamic

304,000 304,025 304,000 15.00

01.08.2017

Berhad 304,000 304,026 304,000 15.00

608,000 608,051 608,000 30.00

Total 2,040,200 2,040,372 2,040,200 100.67

Maturity

date Bank

Bank Berhad

Malayan

Public Bank

United Overseas

Bank Berhad

Maybank Islamic

20

2017 2016 2017 2016

% % Day Day

Short-term deposits with:

- Licensed banks 3.09 - 1 -

- Licensed Islamic banks 3.03 - 1 -

6. AMOUNT DUE (TO)/FROM MANAGER

2017 2016

RM RM

Creation of units* - 4,560

Manager’s fee payable (4,647) (2,684)

(4,647) 1,876

*

7.

2017 2016

RM RM

Amounts owing from brokers - 87,638

Amounts owing to brokers - (39,214)

The normal trade credit period is three business days.

The amount represents amount receivable from the Manager for units created.

Remaining

maturityinterest rate

Included in sundry receivables/payables and accrued expenses were amounts owing from/to

brokers for outstanding contracts where settlement were not due as follows:

The normal credit period in the previous and current financial years for Manager’s fee payable is

one month.

SUNDRY RECEIVABLES/PAYABLES AND ACCRUED EXPENSES

Manager’s fee is at a rate of 1.80% (2016: 1.80%) per annum on the net asset value of the Fund,

calculated on a daily basis.

The weighted average effective interest rate and average remaining maturity of short-term deposits

are as follows:

Weighted average effective

The normal credit period in the previous and current financial years for creation and redemption of

units is three business days.

21

8. AMOUNT DUE TO TRUSTEE

9. NET GAIN FROM INVESTMENTS

2017 2016

RM RM

Net gain on financial assets at FVTPL comprised:

− Net realised gain on sale of investments 299,161 1,287

− Net realised gain on foreign currency exchange 178,870 52,926

− Net unrealised loss on changes in fair values of investments (247,181) (78,709)

− Net unrealised (loss)/gain on foreign currency fluctuation of

investments denominated in foreign currency (22,929) 208,863

207,921 184,367

10. OTHER EXPENSES

11. TOTAL EQUITY

Total equity is represented by:

2017 2016

Note RM RM

Unitholders’ capital (a) 522,350 604,554

Retained earnings

− Realised income (b) 1,504,321 1,082,712

− Unrealised gain (c) - 270,177

2,026,671 1,957,443

Included in other expenses is Goods and Services Tax incurred by the Fund during the financial

year amounting to RM10,466 (2016: RM5,343).

Trustee’s fee is at a rate of 0.06% (2016: 0.06%) per annum on the net asset value of the Fund,

calculated on a daily basis, subject to a minimum fee of RM10,000 per annum.

The normal credit period in the previous and current financial years for Trustee’s fee payable is one

month.

22

(a) UNITHOLDERS’ CAPITAL/UNITS IN CIRCULATION

2016

Number of Number of

units RM units RM

At beginning of the

financial year 3,430,247 604,554 5,321,135 1,668,495

Creation during the

financial year 31,561,410 17,986,543 939,427 532,940

Distributions reinvested

(Note 14) - - 313,565 174,848

Cancellation during the

financial year (31,411,935) (18,068,747) (3,143,880) (1,771,729)

At end of the financial

year 3,579,722 522,350 3,430,247 604,554

(b) REALISED – DISTRIBUTABLE

2017 2016

RM RM

At beginning of the financial year 1,082,712 1,199,648

Total comprehensive income for the financial year 151,432 188,930

Net unrealised gain attributable to investments held

and others transferred to unrealised reserve [Note 11(c)] - (130,379)

Net unrealised gain transferred from unrealised reserve

upon disposal of investments [Note 11(c)] 270,177 -

Distributions out of realised reserve (Note 14) - (175,487)

Net increase/(decrease) in realised reserve for the

financial year 421,609 (116,936)

At end of the financial year 1,504,321 1,082,712

(c) UNREALISED – NON-DISTRIBUTABLE

2017 2016

RM RM

At beginning of the financial year 270,177 139,798

Net unrealised gain attributable to investments held

and others transferred from realised reserve [Note 11(b)] - 130,379

Net unrealised gain transferred to realised reserve

upon disposal of investments [Note 11(b)] (270,177) -

At end of the financial year - 270,177

2017

23

12. UNITS HELD BY RELATED PARTIES

13. INCOME TAX

2017 2016

RM RM

Current financial year – foreign tax 2,829 1,255

2017 2016

RM RM

Net income before tax 154,261 190,185

Taxation at Malaysian statutory rate of 24% 37,023 45,644

Tax effects of:

Income not subject to tax (139,334) (83,609)

Effect of different tax rate in other countries (2,610) (1,919)

Loss not deductible for tax purposes 64,842 18,890

Restriction on tax deductible expenses for unit trust fund 16,845 10,930

Non-permitted expenses for tax purposes 24,192 10,105

Permitted expenses not used and not available for future

financial years 1,871 1,214

Tax expense for the financial year 2,829 1,255

14. DISTRIBUTION

2017 2016

RM RM

Undistributed net income brought forward - 116,936

(Forward)

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:

The Manager and parties related to the Manager did not hold any units in the Fund as at 31 July

2017 and 31 July 2016.

Income tax payable is calculated on investments income less deduction for permitted expenses as

provided for under Section 63B of the Income Tax Act, 1967.

Pursuant to Schedule 6 of the Income Tax Act, 1967, local interest income derived by the Fund is

exempted from tax.

Distribution to unitholders declared on 18 September 2015 and 26 July 2016 are from the

following sources:

24

2017 2016

RM RM

Gross dividend income - 96,544

Interest income - 1,752

Net realised gain on sale of investments - 1,287

Net realised gain on foreign currency exchange - 52,926

- 269,445

Less: Expenses - (92,703)

Tax - (1,255)

Total amount of distributions - 175,487

Gross/net distributions per unit (sen) - 4.50

Distributions made out of:

– Realised reserve [Note 11(b)] - 175,487

Comprising:

Distributions reinvested [Note 11(a)] - 174,848

Distributions payable - 355

Cash distributions - 284

- 175,487

15. MANAGEMENT EXPENSE RATIO (“MER”)

The Fund’s MER is as follows:

2017 2016

% p.a. % p.a.

Manager’s fee 1.80 1.80

Trustee’s fee 0.26 0.42

Fund’s other expenses 2.58 1.71

Total MER 4.64 3.93

16. PORTFOLIO TURNOVER RATIO (“PTR”)

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.

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 1.64 times (2016: 1.34

times).

Included in the distributions for the financial year ended 31 July 2016 was RM116,936 distributed

from previous financial years’ realised income.

25

17. SEGMENTAL REPORTING

– A portfolio of equity instruments; and

– A portfolio of fixed income instruments, including deposits with financial institutions.

Fixed Fixed

Equity income Equity income

portfolio portfolio Total portfolio portfolio Total

RM RM RM RM RM RM

Gross

dividend

income 77,010 - 77,010 96,544 - 96,544

Interest income - 48,181 48,181 - 1,752 1,752

Net gain from

investments:

– Financial

assets at

FVTPL 207,921 - 207,921 184,367 - 184,367

Other

unrealised

foreign

exchange

(loss)/gain (67) - (67) 225 - 225

Total segment

investments

income for the

financial

year 284,864 48,181 333,045 281,136 1,752 282,888

Financial

assets

at FVTPL - - - 1,565,232 - 1,565,232

Deposits with

financial

institutions - 2,040,372 2,040,372 - - -

(Forward)

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:

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.

2017 2016

26

Fixed Fixed

Equity income Equity income

portfolio portfolio Total portfolio portfolio Total

RM RM RM RM RM RM

Dividends

receivable - - - 2,278 - 2,278

Amount owing

from brokers - - - 87,638 - 87,638

Total segment

assets - 2,040,372 2,040,372 1,655,148 - 1,655,148

Amount

owing

to brokers - - - 39,214 - 39,214

Total

segment

liabilites - - - 39,214 - 39,214

2017 2016

RM RM

Net reportable segment investment income 333,045 282,888

Less: Expenses (178,784) (92,703)

Net income before tax 154,261 190,185

Less: Income tax (2,829) (1,255)

Net income after tax 151,432 188,930

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:

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.

2017 2016

27

2017 2016

RM RM

Total segment assets 2,040,372 1,655,148

Amount due from Manager - 1,876

Cash at banks 4,394 350,007

Total assets of the Fund 2,044,766 2,007,031

Total segment liabilities - 39,214

Amount due to Manager 4,647 -

Amount due to Trustee 849 792

Distributions payable - 355

Sundry payables and accrued expenses 12,599 9,227

Total liabilities of the Fund 18,095 49,588

18. TRANSACTIONS WITH BROKERS AND FINANCIAL INSTITUTIONS

Brokers/Financial institutions

RM % RM %

CIMB Securities Limited 6,129,291 48.83 16,243 48.78

Macquarie Bank Limited 2,579,414 20.55 8,207 24.64

CLSA Australia Pty Ltd 1,494,807 11.91 3,167 9.51

Instinet Australia Pty Limited 1,218,510 9.71 3,237 9.72

J.P. Morgan Australia Limited 1,046,359 8.34 2,222 6.67

CIMB Securities (Australia) Limited 72,668 0.58 192 0.58

Macquarie Limited Capital Securities

(Australia) Limited 10,017 0.08 32 0.10

Total 12,551,066 100.00 33,300 100.00

stamp duty and

Brokerage fee,

Details of transactions with brokers and financial institutions for the financial year ended 31 July

2017 are as follows:

Transaction value

The above transactions were in respect of listed securities.

clearing fee

There was no transaction with financial institutions related to the Manager, during the financial

year.

28

19. FINANCIAL INSTRUMENTS

(a)    Classification of financial instruments

Loans and Financial

Financial receivables liabilities at

assets at amortised amortised

at FVTPL cost cost Total

RM RM RM RM

Assets

Deposits with financial institutions - 2,040,372 - 2,040,372

Cash at banks - 4,394 - 4,394

Total financial assets - 2,044,766 - 2,044,766

Liabilities

Amount due to Manager - - 4,647 4,647

Amount due to Trustee - - 849 849

Sundry payables and accrued

expenses - - 12,599 12,599

Total financial liabilities - - 18,095 18,095

Assets

Investments 1,565,232 - - 1,565,232

Amount due from Manager - 1,876 - 1,876

Dividends receivable - 2,278 - 2,278

Sundry receivables - 87,638 - 87,638

Cash at banks - 350,007 - 350,007

Total financial assets 1,565,232 441,799 - 2,007,031

Liabilities

Amount due to Trustee - - 792 792

Distributions payable - - 355 355

Sundry payables and accrued

expenses - - 48,441 48,441

Total financial liabilities - - 49,588 49,588

2016

2017

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.

29

Income, expense, gains

and losses

2017 2016

RM RM

Net gain from financial assets at FVTPL 207,921 184,367

Income, of which derived from:

− Gross dividend income from financial assets at FVTPL 77,010 96,544

− Interest income from loan and receivables 48,181 1,752

− Other unrealised foreign exchange (loss)/gain (67) 225

(b)    Financial instruments that are carried at fair value

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;

Level 2:

Level 3:

Level 1 Level 2 Level 3 Total

RM RM RM RM

1,565,232 - - 1,565,232

(c)

Deposits with financial institutions

Amount due from/to Manager

Dividends receivable

Sundry receivables

Cash at banks

Amount due to Trustee

Distributions payable

Sundry payables and accrued expenses

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:

The following table shows an analysis of financial instruments recorded at fair value by the

level of the fair value hierarchy:

The Fund uses the following hierarchy for determining and disclosing the fair value of

financial instruments by valuation technique:

techniques which use inputs which have a significant effect on the recorded fair

value that are not based on observable market data.

The Fund’s financial assets and liabilities at FVTPL are carried at fair value.

2016

Financial assets at FVTPL

Financial instruments that are not carried at fair value and whose carrying amounts

are reasonable approximation of fair value

other techniques for which all inputs which have a significant effect on the

recorded fair values are observable; either directly or indirectly; or

30

20. RISK MANAGEMENT POLICIES

Market risk

(i) Price risk

Percentage movements in

price by: 2017 2016

RM RM

-5.00% - (78,262)

+5.00% - 78,262

(ii) Interest rate risk

Market risk, in general, is the risk that the value of a portfolio would decrease due to changes in

market risk factors such as equity prices, interest rates, foreign exchange rates, and commodity

prices.

Risk management is carried out by closely monitoring, measuring and mitigating the above said

risks, careful selection of investments 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.

There are no financial instruments which are not carried at fair values and whose carrying

amounts are not reasonable approximation of their respective fair values.

Price risk refers to the uncertainty of an investment’s future prices. In the event of adverse

price movements, the Fund might endure potential loss on its quoted investments. In

managing price risk, the Manager actively monitors the performance and risk profile of the

investment portfolio.

The result below summarised the price risk sensitivity of the Fund’s NAV due to

movements of price by -5.00% and +5.00% respectively.

Sensitivity of the Fund’s NAV

The result below summarised the interest rate sensitivity of the Fund’s NAV, or theoretical

value (applicable to money market deposit) due to the parallel movement assumption of the

yield curve by +100bps and -100bps respectively:

Interest rate risk will affect the value of the Fund’s investments, given the interest rate

movements, which are influenced by regional and local economic developments as well as

political developments.

Domestic interest rates on deposits and placements with licensed financial institutions are

determined based on prevailing market rates.

The Fund is exposed to a variety of risks that include market risk, credit risk, liquidity risk, single

issuer risk, regulatory risk, country risk, management risk and non-compliance risk.

31

Parallel shift in yield

curve by: 2017 2016

RM RM

+100bps (54) -

-100bps 55 -

(iii) Currency risk

Percentage movements in

currencies other than the 2017 2016

Fund’s functional currency: RM RM

-5.00% (88) (95,897)

+5.00% 88 95,897

2017

Assets/(liabilities) denominated RM % of net RM % of net

in Australian Dollar equivalent asset value equivalent asset value

Investments - - 1,565,232 79.96

Dividends receivable - - 2,278 0.11

Sundry receivables - - 87,638 4.48

Cash at banks 1,754 0.09 302,012 15.43

Sundry payables - - (39,214) (2.00)

1,754 0.09 1,917,946 97.98

Credit risk

Currency risk is associated with the Fund’s assets and liabilities that are denominated in

currencies other than the Fund’s functional currency. Currency risk refers to the potential

loss the Fund might face due to unfavorable fluctuations of currencies other than the Fund’s

functional currency against the Fund’s functional currency.

The result below summarised the currency risk sensitivity of the Fund’s NAV due to

appreciation/depreciation of the Fund’s functional currency against currencies other than the

Fund’s functional currency.

The net unhedged financial assets and financial liabilities of the Fund that are not

denominated in Fundʼs functional currency are as follows:

Credit risk is the risk that the counterparty to a financial instrument will cause a financial loss to

the Fund by failing to discharge an obligation. Credit risk applies to short-term deposits and

dividends receivable. The issuer of such instruments may not be able to fulfill the required

interest payments or repay the principal invested or amount owing. These risks may cause the

Fund’s investments to fluctuate in value.

Sensitivity of the Fund’s NAV, or theoretical value

Sensitivity of the Fund’s NAV

2016

32

Liquidity risk

Single issuer risk

Regulatory risk

Country risk

Management risk

Non-compliance risk

Liquidity risk is defined as the risk of being unable to raise funds or borrowings to meet payment

obligations as they fall due. This is also the risk of the Fund experiencing large redemptions,

when the Investment Manager could be forced to sell large volumes of its holdings at

unfavourable prices to meet redemption requirements.

Internal policy restricts the Fund from investing in securities issued by any issuer of not more

than a certain percentage of its net asset value. Under such restriction, the risk exposure to the

securities of any single issuer is diversified and managed based on internal/external ratings.

The risk of price fluctuation in foreign securities may arise due to political, financial and

economic events in foreign countries. If this occurs, there is a possibility that the net asset value

of the Fund may be adversely affected.

Poor management of the Fund may cause considerable losses to the Fund that in turn may affect

the net asset value of the Fund.

This is the risk of the Manager, the Trustee or the Fund not complying with internal policies, the

Deed of the Fund, securities law or guidelines issued by the regulators. Non-compliance risk may

adversely affect the investments of the Fund when the Fund is forced to rectify the non-

compliance.

Any changes in national policies and regulations may have effects on the capital market and the

net asset value of the Fund.

The Fund maintains sufficient level of liquid assets, after consultation with the Trustee, to meet

anticipated payments and cancellations of units by unitholders. 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.

For deposits with financial institutions, the Fund makes placements with financial institutions

with sound rating of P1/MARC-1 and above. Cash at banks are held for liquidity purposes and

are not exposed to significant credit risk.

33

21. CAPITAL MANAGEMENT

No changes were made in the objective, policies or processes during the financial years ended 31

July 2017 and 31 July 2016.

The Fund manages its capital structure and makes adjustments to it, in light of changes in

economic conditions. To maintain or adjust the capital structure, the Fund may issue new or

bonus units, make distribution payment, or return capital to unitholders by way of redemption of

units.

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.

34

AmAustralia

STATEMENT BY THE MANAGER

Kuala Lumpur, Malaysia

7 September 2017

GOH WEE PENG

For and on behalf of the Manager

AmFunds Management Berhad

I, GOH WEE PENG, for and on behalf of the Manager, AmFunds Management Berhad, for

AmAustralia do hereby state that in the opinion of the Manager, the accompanying statement of

financial position, statement of comprehensive income, statement of changes in equity, statement of

cash flows and the accompanying notes are 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 31 July 2017 and the comprehensive income, the

changes in equity and cash flows of the Fund for the financial year then ended.

35

36

TRUSTEE’S REPORT

37

DIRECTORY

Head Office 9th

Floor, Bangunan Ambank Group

55, Jalan Raja Chulan, 50200 Kuala Lumpur

Tel: (03) 2032 2888 Facsimile: (03) 2031 5210

Email: enquiries@aminvest.com

Postal Address AmFunds Management Berhad

P.O Box 13611, 50816 Kuala Lumpur

Related Institutional Unit Trust Agent

AmBank (M) Berhad Head Office

Company No. 8515-D 31st Floor, Menara AmBank

No. 8 Jalan Yap Kwan Seng, 50450 Kuala Lumpur

AmInvestment Bank Berhad Head Office

Company No. 23742-V 22nd

Floor, Bangunan AmBank Group

55 Jalan Raja Chulan, 50200 Kuala Lumpur

For more details on the list of IUTAs, please contact the Manager.

For enquiries about this or any of the other Funds offered by AmFunds Management Berhad

Please call 2032 2888 between 8.45 a.m. to 5.45 p.m. (Monday to Thursday),

Friday (8.45 a.m. to 5.00 p.m.)

Semi-Annual Report28 February 2015

03 2132 2888 | aminvest.com | enquiries@aminvest.com

AmFunds Management Berhad (155432-A)