Annual Report for AmASEAN Equity - AmInvest€¦ · 16 Notes to the Financial Statements 45 Statement by the Manager 46 Trustee’s Report 47 Report of the Shariah Adviser to the

Annual Report for

AmASEAN Equity30 June 2020

AmASEAN Equity

TRUST DIRECTORY

Manager

AmFunds Management Berhad 9th & 10th Floor, Bangunan AmBank Group

55 Jalan Raja Chulan 50200 Kuala Lumpur

Board of Directors Jeyaratnam A/L Tamotharam Pillai

Dato’ Mustafa Bin Mohd Nor Tai Terk Lin

Sum Leng Kuang Goh Wee Peng

Investment Committee Sum Leng Kuang

Tai Terk Lin Dato’ Mustafa Bin Mohd Nor

Zainal Abidin Bin Mohd Kassim Goh Wee Peng

Investment Manager AmIslamic Funds Management Sdn Bhd

Shariah Adviser Amanie Advisors Sdn Bhd

Trustee Deutsche Trustees Malaysia Berhad

Auditors and Reporting Accountants Ernst & Young PLT

Taxation Adviser Deloitte Tax Services Sdn Bhd

AmASEAN Equity

CONTENTS

1 Manager’s Report

8 Independent Auditor’s Report to the Unitholders

12 Statement of Financial Position

13 Statement of Comprehensive Income

14 Statement of Changes in Equity

15 Statement of Cash Flows

16 Notes to the Financial Statements

45 Statement by the Manager

46 Trustee’s Report

47 Report of the Shariah Adviser to the Unitholders

48 Directory

1

MANAGER’S REPORT Dear Unitholders, We are pleased to present you the Manager’s report and the audited accounts of AmASEAN Equity (“Fund”) for the financial year ended 30 June 2020. Salient Information of the Fund

Name AmASEAN Equity (“Fund”)

Category/ Type

Equity (Islamic) / Growth

Objective

The Fund seeks to provide capital growth over the medium to long term by investing in Shariah-compliant equities and Shariah-compliant equity-related securities with exposure to the ASEAN markets. Note: Any material change to the investment objective of the Fund would require Unitholders’ approval.

Duration The Fund was established on 6 June 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

The performance benchmark is the S&P ASEAN BMI Shariah Index (“S&P ASEAN”) (formerly known as S&P Shariah ASEAN Index) (Available at www.aminvest.com) Note: The benchmark does not imply that the risk profile of the Fund is the same as the risk profile of the benchmark. Investors of the Fund will assume a higher risk compared to the benchmark. Hence, the returns of the Fund may be potentially higher due to the higher risk faced by the investors.

Disclaimer: The S&P ASEAN BMI Shariah Index (the S&P ASEAN BMI Shariah Index) is a product of S&P Dow Jones Indices LLC (“SPDJI”), and has been licensed for use by AmFunds Management Berhad. S&P® is a registered trademark of S&P Global (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); AmASEAN Equity are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, any of their respective affiliates (collectively, “S&P Dow Jones Indices”). S&P Dow Jones Indices makes no representation or warranty, express or implied, to the owners of the AmASEAN Equity or any member of the public regarding the advisability of investing in securities generally or in AmASEAN Equity particularly or the ability of the S&P ASEAN BMI Shariah Index to track general market performance. S&P Dow Jones Indices’ only relationship to AmFunds Management Berhad with respect to the S&P ASEAN BMI Shariah Index is the licensing of the Index and certain trademarks, service marks and/or trade names of S&P Dow Jones Indices and/or its licensors. The S&P ASEAN BMI Shariah Index is determined, composed and calculated by S&P Dow Jones Indices without regard to AmFunds Management Berhad or the AmASEAN Equity. S&P Dow Jones Indices have no obligation to take the needs of AmFunds Management Berhad or the owners of AmASEAN Equity into consideration in determining, composing or calculating the S&P ASEAN BMI Shariah Index. S&P Dow Jones Indices are not responsible for and have not participated in the determination of the prices, and amount of AmASEAN Equity or the timing of the issuance or sale of AmASEAN Equity or in the determination or calculation of the equation by which AmASEAN Equity is to be converted into cash, surrendered or redeemed, as the case may be. S&P Dow Jones

2

Indices have no obligation or liability in connection with the administration, marketing or trading of AmASEAN Equity. There is no assurance that investment products based on the S&P ASEAN BMI Shariah Index will accurately track index performance or provide positive investment returns. S&P Dow Jones Indices LLC is not an investment advisor. Inclusion of a security within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security, nor is it considered to be investment advice. S&P DOW JONES INDICES DOES NOT GUARANTEE THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE INDEX OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE (INCLUDING, WITHOUT LIMITATION, COMPLIANCE WITH SHARIAH LAW) OR AS TO RESULTS TO BE OBTAINED BY AMFUNDS MANAGEMENT BERHAD, OWNERS OF THE AMASEAN EQUITY, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE INDEX OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBLITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND AMFUNDS MANAGEMENT BERHAD, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.

Income Distribution Policy

Income distribution (if any) is incidental and will be reinvested.

Breakdown of Unit Holdings by Size

For the financial year under review, the size of the Fund stood at 2,237,201 units.

Size of holding As at 30 June 2020 As at 30 June 2019

No of units held

Number of unitholders

No of units held

Number of unitholders

5,000 and below 4,517 1 8,199 2

5,001-10,000 - - 15,381 2

10,001-50,000 - - 97,432 4

50,001-500,000 514,354 3 974,411 6

500,001 and above 1,718,330 2 1,204,381 1

Fund Performance Data

Portfolio Composition

Details of portfolio composition of the Fund for the financial years as at 30 June are as follows: (Forward)

3

FY 2020

%

FY 2019

%

FY 2018

%

Consumer discretionary - 2.37 1.57

Consumer staples 8.30 11.44 11.17

Energy 2.01 8.45 6.52

Industrials 10.61 18.66 9.52

Information technology 2.38 0.91 4.86

Materials 2.09 5.60 8.40

Health care 25.51 9.84 4.93

Real estate/Properties 8.81 9.46 9.77

Telecommunication services 8.98 9.35 17.42

Utilities 9.61 4.28 8.92

Money market deposits & cash equivalents

21.70 19.64 16.92

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 30 June are as follows:

FY 2020

FY 2019

FY 2018

Net asset value (RM)* 1,115,234 1,131,083 2,002,415

Units in circulation * 2,237,201 2,299,804 4,344,061

Net asset value per unit (RM)* 0.4985 0.4918 0.4610

Highest net asset value per unit (RM)* 0.5138 0.4966 0.5351

Lowest net asset value per unit (RM)* 0.3609 0.4515 0.4544

Benchmark performance (%) -13.25 9.34 -10.86

Total return (%)(1) 1.36 6.68 -8.33

Capital growth (%) 1.36 6.68 -8.33

- Income distribution (%) - - -

Gross distribution (sen per unit) - - -

Net distribution (sen per unit) - - -

Management expense ratio (%)(2) 5.57 4.29 3.53

Portfolio turnover ratio (times)(3) 1.23 0.79 0.73

* Above prices and net asset value per unit are not 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 1.28% as compared to 4.29% per annum for the financial year ended 30 June 2019 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 0.44 times (55.7%) as compared to 0.79 times for the financial year ended 30 June 2019 mainly due to increase in investing activities.

(Forward)

4

Average Total Return (as at 30 June 2020)

AmASEAN Equity(a)

%

S&P ASEAN(b)

%

One year 1.36 -13.25

Three years -0.29 -5.43

Five years 0.67 -1.42

Since launch (6 June 2011) 2.58 1.16

Annual Total Return

Financial Years Ended (30 June)

AmASEAN Equity(a)

%

S&P ASEAN(b)

%

2020 1.36 -13.25

2019 6.68 9.34

2018 -8.33 -10.86

2017 0.94 9.01

2016 3.31 1.01

(a) Source: Novagni Analytics and Advisory Sdn Bhd. (b) S&P ASEAN BMI Shariah Index (“S&P ASEAN”) (Available at

www.aminvest.com) The Fund performance is calculated based on 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 year under review, the Fund registered a return of 1.36% which was entirely capital in nature. Thus, the Fund’s return of 1.36% has outperformed the benchmark’s negative return of 13.25% by 14.61%. As compared with the financial year ended 30 June 2019, the net asset value (“NAV”) per unit of the Fund increased by 1.36% from RM0.4918 to RM0.4985, while units in circulation decreased by 2.72% from 2,299,804 units to 2,237,201 units. The line chart below shows comparison between the annual performances of AmASEAN Equity and its benchmark, S&P ASEAN, for the financial years ended 30 June. (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?

For the financial year 2020, the Fund generated 1.36% capital growth, outperforming the benchmark by 14.61%, hence the Fund has met its objective for the financial year ending June 30, 2020.

Strategies and Policies Employed

Using fundamental research and quantitative analysis, the investment management team adds value through active tactical asset allocation between asset classes and selects securities based on current income, prospects of growth and capital appreciation potential.

Portfolio Structure

This table below is the asset allocation of the Fund for the financial years under review.

As at 30.6.2020

%

As at 30.6.2019

%

Changes

%

Consumer discretionary - 2.37 -2.37

Consumer staples 8.30 11.44 -3.14

Energy 2.01 8.45 -6.44

Industrials 10.61 18.66 -8.05

Information technology 2.38 0.91 1.47

Materials 2.09 5.60 -3.51

Health care 25.51 9.84 15.67

Real estate/Properties 8.81 9.46 -0.65

Telecommunication services 8.98 9.35 -0.37

Utilities 9.61 4.28 5.33

Money market deposits & cash equivalents

21.70 19.64 2.06

Total 100.00 100.00

The Fund’s equity exposure as at 30th June 2020 was 78.30% versus 80.36% as at 30th June 2019. The Fund tactically increased cash on the back of uncertainty in the market given the Covid-19 impact on global economy. Increasing the Fund’s cash allocation for now would provide the fund with opportunity to buy on dips To further tilt the Fund to a more defensive positioning, weightage in the utilities was increased while reducing energy, industrials and material. Although the

6

telecommunications sector has historically been defensive, competition has stiffened over the years which prompted the fund manager to reduce position within the sector. The increase weightage in healthcare was due to rubber gloves sector as gloves are seeing strong earnings growth going forward driven by strong demand and higher selling prices.

Cross Trades

There were no cross trades undertaken during the financial year under review.

Distribution/ Unit splits

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

State of Affairs

There has been neither significant change to the state of affairs of the Fund nor any circumstances that materially affect any interests of the unitholders during the financial year under review.

Rebates and Soft Commission

During the year, the management company received soft commissions by virtue of transactions conducted for the Fund, in the form of research services or quotation services that assist in investment decision making process which are of demonstrable benefit to unitholders of the Fund.

Market Review

ASEAN markets went through a tough period in the 2nd half of 2019 mainly due to the escalation in the United States (US)-China trade war. Countries in ASEAN have substantial trade relationships with China and as China slows down, ASEAN was affected as well. During the period under review, the domestic consumer centric country in the region fared better with Indonesia down 0.93% while Philippines was the second-best market, down by 2.31%. Thailand was the worst performing with a -8.70% given the export nature of its economy as well as stronger Baht. Moving into 2020, markets were gripped by fear of the outbreak of Covid-19 which caused markets to fear of recession as US initial jobless claims to skyrocket to all time high while government from all over the world have imposed lockdown to ease the infection rate. During the period under review, Malaysia was the best performing market with a -5.53% as weaknesses seen in the market was offset by the strong outlook of rubber glove stocks while the worse performing country is Indonesia, with -22.13%, given the country that has most cases of Covid-19 in the Asean region.

Market Outlook

As we enter 2H2020, most investors would have expected a better market performance than the first half, judging from the recovery of the market since the 1Q2020 sell down. The recovery for the last 3 months after the steep sell-off in 1Q2020 has qualified as the most volatile. The current market has been filled with fears and hopes but simultaneously driven by ample liquidity on the back of extensive fiscal and monetary stimulus implemented to shield the economy from the impact of COVID-19 pandemic, and to subsequently also drive growth. Sustainability is still arguable, although some indices have recovered to pre-crisis levels but the actual impact to the global economy has yet to be fully reflected. We maintain our neutral call on all ASEAN markets as the markets may continue to be a trading market due to volatility surrounding the uncertainty of the economy given the impact of Covid-19.

Moving to the local market, the local market flushed with liquidity, be it from the low interest rate environment or continuous government assistance, has helped in supporting the market. This has been strengthened by the 36% retail participation in the local equity market lately vis-à-vis 20% in 2019. We remain cautious, as: 1. market recovery driven by retailers’ liquidity is not sustainable; 2. the local political development is unstable; 3. corporate earnings expectation is weak; and 4. job market stability is lacking.

7

These are the main headwinds for the KLCI in the near term. We will continue to keep a good amount of cash in anticipation of any pullbacks. Focus will be based on bottom-up approach with sector preferences in consumer (non-discretionary), technology, gloves, selective construction and Real Estate Investment Trusts (REITs).

Additional Information

The following information was updated: 1. Seohan Soo resigned as a Non-Independent, Non-Executive Director for AmFunds

Management Berhad with effect from 1st January 2020.

Kuala Lumpur, Malaysia AmFunds Management Berhad 24 August 2020

Independent auditors’ report to the unit holders of

AmASEAN Equity

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 AmAsean Equity (“the Fund”), which comprise the statement of financial position as at 30 June 2020, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the financial year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 12 to 44. In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Fund as at 30 June 2020, and of its financial performance and cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards.

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 Code of Ethics for Professional Accountants (including International Independence Standards) (“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 the information in the annual report of the Fund, 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.

8


AmASEAN Equity (cont’d.)

Information other than the financial statements and auditors’ report thereon (cont’d.)

Responsibilities of the Manager and the Trustees for the financial statements

Auditor’s responsibilities for the audit of the financial statements

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. 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 the 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. 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.

9



Auditor’s responsibilities for the audit of the financial statements (cont’d.)

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.

• 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.

10



Other matters

Ernst & Young PLT Lee Pei Yin

202006000003 (LLP0022760-LCA) & AF 0039 No. 03189/05/2021 J

Chartered Accountants Chartered Accountant

Kuala Lumpur, Malaysia

24 August 2020

This report is made solely to the unitholders of the Fund, as a body, in accordance with the Guidelines on Unit Trust Funds issued by Securities Commission Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

11

AmASEAN Equity

STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2020

2020 2019

Note RM RM

ASSETS

Shariah-compliant investments 4 873,235 908,862

Dividends receivable 3,320 3,202

Deposits with financial institutions 5 253,013 257,021

Cash at banks 2,485 26,891 TOTAL ASSETS 1,132,053 1,195,976

LIABILITIES

Amount due to Manager 6 1,910 8,221

Amount due to Trustee 7 875 822

Amounts due to brokers 8 - 41,567

Sundry payables and accrued expenses 14,034 14,283

TOTAL LIABILITIES 16,819 64,893

NET ASSET VALUE (“NAV”) OF THE FUND 1,115,234 1,131,083

EQUITY

Unit holders’ capital 10(a) (1,888,085) (1,876,811)

Retained earnings 10(b)(c) 3,003,319 3,007,894 NET ASSETS ATTRIBUTABLE TO UNIT HOLDERS 10 1,115,234 1,131,083

UNITS IN CIRCULATION 10(a) 2,237,201 2,299,804

NAV PER UNIT 49.85 sen 49.18 sen

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

12#

AmASEAN Equity

STATEMENT OF COMPREHENSIVE INCOME

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020

2020 2019Note RM RM

SHARIAH-COMPLIANT INVESTMENT

INCOME

Gross dividend/distribution income 20,841 34,634

Profit income 5,084 7,425

Net gain from Shariah-compliant investments:

− Financial assets at fair value through profit or

loss (“FVTPL”) 9 40,974 120,986

Other unrealised foreign exchange gain - 18

66,899 163,063

EXPENDITURE

Manager’s fee 6 (19,302) (25,824)

Trustee’s fee 7 (10,000) (10,000)

Auditors’ remuneration (8,500) (8,500)

Tax agent’s fee (5,200) (5,200)

Brokerage and transaction fee (10,606) (8,772)

Custodian’s fee (4,191) (3,725)

Other expenses (12,566) (8,508)

(70,365) (70,529)

Net (loss)/income before tax (3,466) 92,534

Less: Income tax 12 (1,109) (1,690)

Net (loss)/income after tax, representing total

comprehensive (loss)/income for the financial year (4,575) 90,844

Total comprehensive (loss)/income comprises the

following:

Realised loss (47,889) (82,993)

Unrealised gain 43,314 173,837

(4,575) 90,844


13#

AmASEAN Equity

STATEMENT OF CHANGES IN EQUITY


Retained Total

capital earnings equity Note RM RM RM

At 1 July 2018 (914,635) 2,917,050 2,002,415

Total comprehensive income

the financial year - 90,844 90,844

Creation of units 10(a) 35,672 - 35,672

Cancellation of units 10(a) (997,848) - (997,848)Balance at 30 June 2019 (1,876,811) 3,007,894 1,131,083

At 1 July 2019 (1,876,811) 3,007,894 1,131,083

Total comprehensive loss

for the financial year - (4,575) (4,575)

Creation of units 10(a) 615,067 - 615,067

Cancellation of units 10(a) (626,341) - (626,341)Balance at 30 June 2020 (1,888,085) 3,003,319 1,115,234


Unit holders’

14#

AmASEAN Equity

STATEMENT OF CASH FLOWS


2020 2019Note RM RM

CASH FLOWS FROM OPERATING AND

INVESTING ACTIVITIES

Proceeds from sale of Shariah-compliant investments 1,357,471 1,580,052

Dividends received 19,613 32,382

Profit received 5,084 7,425

Manager’s fee paid (19,035) (27,419)

Trustee’s fee paid (9,947) (9,973)

Tax agent’s fee paid (5,200) (5,200)

Custodian’s fee paid (4,191) (3,725)

Payments for other expenses (31,920) (27,997)

Purchase of Shariah-compliant investments (1,322,437) (662,764)

Net cash (used in)/generated from operating and

investing activities (10,562) 882,781

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from creation of units 615,067 35,672

Payments for cancellation of units (632,919) (991,270)

Net cash used in financing activities (17,852) (955,598)

NET DECREASE IN CASH AND CASH

EQUIVALENTS (28,414) (72,817)

CASH AND CASH EQUIVALENTS AT

BEGINNING OF FINANCIAL YEAR 283,912 356,729

CASH AND CASH EQUIVALENTS AT

END OF FINANCIAL YEAR 255,498 283,912

Cash and cash equivalents comprise:

Deposits with financial institutions 5 253,013 257,021

Cash at banks 2,485 26,891

255,498 283,912


15

AmASEAN Equity

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

The financial statements of the Fund have been prepared on a historical cost basis, except as

otherwise stated in the accounting policies and comply with Malaysian Financial Reporting

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

International Financial Reporting Standards (“IFRS”), and the Securities Commission

Malaysia’s Guidelines on Unit Trust Funds in Malaysia.

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 will adopt the following MFRSs and Amendments to MFRSs when they become

effective in the respective financial periods and these MFRSs and Amendments to MFRSs are

not expected to have any material impact to the financial statements of the Fund upon initial

application.

AmASEAN Equity (“the Fund”) was established pursuant to a Deed dated 9 March 2011 (“the

Deed”), between AmFunds Management Berhad as the Manager, Deutsche Trustees Malaysia

Berhad as the Trustee and all unit holders.

The Fund was set up with the objective to provide capital growth over the medium to long term

by investing in Shariah-compliant equities and equity-related securities with exposure to the

ASEAN markets. As provided in the Deed, the “accrual period” or financial year shall end on 30

June and the units in the Fund were first offered for sale on 6 June 2011.

The financial statements were authorised for issue by the Manager on 24 August 2020.

16

AmASEAN Equity



2. BASIS OF PREPARATION OF FINANCIAL STATEMENTS (CONT’D.)

Standards issued but not yet effective (cont’d.)

Effective for

financial periods

beginning on or after

MFRS 17 Insurance Contracts 1 January 2021

Amendments to MFRS 101: Presentation of Financial Statements 1 January 2022

Classification of Liabilities as Current or Non-Current

Amendments to MFRSs contained in the document entitled 1 January 2022

“Annual Improvements to MFRS Standards 2018-2020”

Reference to the Conceptual Framework (Amendments to 1 January 2022

MFRS 3 Business Combinations )*

Property, Plant and Equipment – Proceeds before Intended Use 1 January 2022

(Amendments to MFRS 116 Property, Plant and Equipment )*

Onerous Contracts – Cost of Fulfilling a Contract (Amendments 1 January 2022

to MFRS 137 Provisions, Contingent Liabilities and Contingent Assets )

Amendments to MFRS 10 and MFRS 128: Sale or Contribution Deferred

of Assets between an investor and its Associate or Joint Venture*

* These MFRS and Amendments to MFRSs are not relevant to the Fund.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3.1 Income recognition

(i) Dividend/Distribution income

(ii) Profit income

(iii) Gain or loss on disposal of Shariah-compliant investments

Income is recognised to the extent that it is probable that the economic benefits will flow

to the Fund and the income can be reliably measured. Income is measured at the fair

value of consideration received or receivable.

Dividend/distribution income is recognised when the Fund’s right to receive payment

is established.

Profit income on Islamic short-term deposits is recognised on an accrual basis using

the effective profit method.

On disposal of Shariah-compliant 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 Shariah-compliant investments. The net realised gain or loss

is recognised in profit or loss.17

AmASEAN Equity



3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D.)

3.2 Income tax

3.3 Functional and presentation currency

3.4 Foreign currency transactions

3.5 Statement of cash flows

3.6 Distribution

3.7 Unit holders’ capital

Cash equivalents are short-term, highly liquid Shariah-compliant investments that are

readily convertible to cash with insignificant risk of changes in value.

The unit holders’ capital of the Fund meets the definition of puttable instruments and is

classified as equity instruments under MFRS 132 Financial Instruments: Presentation

(“MFRS 132”).

Distributions are at the discretion of the Fund. A distribution to the Fund’s unit holders is

accounted for as a deduction from realised income. A proposed distribution is recognised

as a liability in the period in which it is approved. Distribution is either reinvested or paid in

cash to the unit holders on the income payment date. Reinvestment of units is based on

the NAV per unit on the income payment date, which is also the time of creation.

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

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 RM at

exchange rates ruling at the reporting date. All exchange gains or losses are recognised

in profit or loss.

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 (“RM”) which

reflects the currency in which the Fund competes for funds, issues and redeems units.

The Fund has also adopted RM as its presentation currency.

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.

18

AmASEAN Equity




3.8 Financial assets – initial recognition and measurement

(i) Initial recognition

(ii) Initial measurement

(iii) “Day 1” profit or loss

3.9 Financial assets – classification and subsequent measurement

At initial measurement, if the transaction price differs from the fair value, the Fund

immediately recognises the difference between the transaction price and fair value

(a “Day 1” profit or loss) in profit or loss provided that fair value is evidenced by a

quoted price in an active market for an identical asset or liability (i.e. Level 1 input)

or based on a valuation technique that uses only data from observable markets. In

all other cases, the difference between the transaction price and model value is

recognised in profit or loss on a systematic and rational basis that reflects the nature

of the instrument over its tenure.

The Fund subsequently measures its Shariah-compliant investments in equity

investments and collective investment schemes (“CIS”) at FVTPL. Dividends/distributions

earned whilst holding the Shariah-compliant investments are recognised in profit or loss

when the right to the payment has been established. Gains and losses on the

investments, realised and unrealised, are included in profit or loss.

All financial assets are recognised initially at fair value, in the case of financial

assets not recorded at FVTPL, transaction costs that are attributable to the

acquisition of the financial asset. All financial liabilities are recognised initially at fair

value and, in the case of financial liabilities not recorded at FVTPL, net of directly

attributable transaction costs.

Financial assets and financial liabilities are recognised when the Fund becomes a

party to the contractual provisions of the instrument. Regular way purchases and

sales of financial assets are recognised using trade date accounting or settlement

date accounting. The method used is applied consistently for all purchases and

sales of financial assets that belong to the same category of financial assets.

19

AmASEAN Equity




3.10 Financial assets under MFRS 9

(i) Classification and measurement

The Fund may classify its financial assets under the following categories:

Financial assets at amortised cost

Financial assets at FVOCI

A financial asset is measured at fair value through other comprehensive income

(“FVOCI”) if its business model is both to hold the asset to collect contractual cash

flows and to sell the financial asset. In addition, the contractual terms of the

financial assets give rise on specified dates to cash flows that are solely payments

of principal and profit on the outstanding principal.

A financial asset is measured at amortised cost if it is held within a business model

whose objective is to hold financial assets in order to collect contractual cash flows

and its contractual terms give rise on specified dates to cash flows that are solely

payments of principal and profit on the principal amount outstanding. The Fund

includes in this category deposits with financial institutions, cash at banks, amounts

due from brokers/financial institutions, amount due from the Manager and other

receivables.

The classification of financial assets depends on the Fund’s business model of

managing the financial assets in order to generate cash flows (“business model

test”) and the contractual cash flow characteristics of the financial instruments

(“SPPP test”). The business model test determines whether cash flows will result

from collecting contractual cash flows, selling the financial assets, or both and the

assessment is performed on a portfolio basis. The SPPP test determines whether

the contractual cash flows are solely for payments of principal and profit and the

assessment is performed on a financial instrument basis.

These Shariah-compliant investments are initially recorded at fair value and

transaction costs are expensed in the profit or loss. Subsequent to initial recognition,

these Shariah-compliant investments are remeasured at fair value. All fair value

adjustments are initially recognised through OCI. Debt instruments at FVOCI are

subject to impairment assessment.

20

AmASEAN Equity




3.10 Financial assets under MFRS 9 (cont’d.)

(i) Classification and measurement (cont’d.)

Financial assets at FVTPL

3.11 Financial liabilities – classification and subsequent measurement

Financial liabilities issued by the Fund are classified as financial liabilities at amortised

cost, where the substance of the contractual arrangement results in the Fund having an

obligation either to deliver cash or another financial asset to the holder. After initial

measurement, financial liabilities are subsequently measured at amortised cost using the

effective profit method. Amortised cost is calculated by taking into account any discount

or premium on acquisition and fees or costs that are an integral part of the effective profit

rate.

Instruments that qualify for amortised cost or FVOCI may be irrevocably designated

as FVTPL, if doing so eliminates or significantly reduces a measurement or

recognition inconsistency. Equity instruments are normally measured at FVTPL,

nevertheless, the Fund is allowed to irrevocably designate equity instruments that

are not held for trading as FVOCI, with no subsequent reclassification of gains or

losses to profit or loss.

Any financial assets that are not measured at amortised cost or FVOCI are

measured at FVTPL. Subsequent to initial recognition, financial assets at FVTPL are

measured at fair value. Changes in the fair value of those financial instruments are

recorded in “Net gain or loss on financial assets at FVTPL”. Profit earned,

distribution income and dividend revenue elements of such instruments are recorded

separately in “Profit income” and “Dividend/distribution income” respectively.

Exchange differences on financial assets at FVTPL are recognised separately in

profit or loss but are included in net gain or net loss on changes in fair value of

financial assets at FVTPL.

21

AmASEAN Equity




3.12 Derecognition of financial instruments

(i) Derecognition of financial asset

-

-

-

-

(ii) Derecognition of financial liability

3.13 Financial instruments – expected credit losses (“ECL”)

-

-

-

the time value of money; and

an unbiased and probability-weighted amount that is determined by evaluating a

range of possible outcomes;

The Fund assesses on a forward-looking basis the ECL associated with its financial

assets at amortised cost. The Fund recognises a loss allowance for such losses at each

reporting date. The measurement of ECL reflects:

A financial liability is derecognised when the obligation under the liability is

discharged, cancelled or expired. Gains and losses are recognised in profit or loss

when the liabilities are recognised, and through the amortisation process.

the Fund has neither transferred nor retained substantially all the risks

and rewards of the asset, but has transferred control of the asset.

the rights to receive cash flows from the asset have expired, or

A financial asset (or, where applicable a part of a financial asset or part of a group of

similar financial assets) is derecognised when:

Financial assets together with the associated allowance are written off when it has

exhausted all practical recovery efforts and there is no realistic prospect of future

recovery. The Fund may also write-off financial assets that are still subject to

enforcement activity when there is no reasonable expectation of full recovery. If a write-

off is later recovered, the recovery is credited to profit or loss.

reasonable and supportable information that is available without undue cost or effort

at the reporting date about past events, current conditions and forecasts of future

economic conditions.

the Fund has transferred its rights to receive cash flows from the asset or has

assumed an obligation to pay the received cash flows in full without material

delay to a third party under a “pass-through” arrangement; and either:

The ECL in respect of financial assets at amortised cost, if any, is recognised in profit or

loss.

the Fund has transferred substantially all the risks and rewards of the

asset, or

For Shariah-compliant investments classified as FVOCI, the cumulative fair value

change recognised in OCI is recycled to profit or loss.

22

AmASEAN Equity




3.14 Determination of fair value

3.15 Classification of realised and unrealised gains and losses

3.16 Significant accounting estimates and judgments

Realised gains and losses on disposals of financial instruments are classified at FVTPL

and are calculated using weighted average method. They represent the difference

between an instrument’s initial carrying amount and disposal amount.

For Shariah-compliant investments in local quoted equity securities, fair value is

determined based on the closing price quoted on Bursa Malaysia Berhad. For Shariah-

compliant investments in foreign listed securities, which are quoted in the respective

stock exchanges, fair value will be determined based on the published market price

quoted by the respective stock exchanges at the end of each business day. For the

Shariah-compliant investment in unquoted CIS, fair value is determined based on the

closing NAV per unit of the CIS. Purchased cost is the quoted price that the Fund paid

when buying it investments. The difference between purchased cost and fair value is

treated as unrealised gain or loss and is recognised in profit or loss. Unrealised gains or

losses recognised in profit or loss are not distributable in nature.

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.

The Fund classifies its Shariah-compliant investments as financial assets at FVTPL as

the Fund may sell its Shariah-compliant investments in the short-term for profit-taking or

to meet unit holders’ cancellation of units.

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.

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.

23

AmASEAN Equity



4. SHARIAH-COMPLIANT INVESTMENTS

2020 2019

Note RM RM


Quoted Shariah-compliant equity securities - local (a) 547,464 437,485

Quoted Shariah-compliant equity securities - foreign (b) 261,293 471,377

Quoted CIS - local (c) 64,478 -

873,235 908,862

Details of Shariah-compliant investments are as follows:-

Fair

value as aNumber Fair Purchased percentage

Name of company of shares value cost of NAV

RM RM %

2020

(a) Quoted Shariah-compliant equity securities - local

Malaysia

Consumer staples

NTPM Holdings Berhad 50,800 25,146 22,032 2.25

Energy

Yinson Holdings Berhad 3,800 22,420 18,700 2.01

Health care

Hartalega Holdings Berhad 4,100 53,300 21,995 4.78

Kossan Rubber Industries Bhd 5,500 46,805 41,114 4.20

Supermax Corporation Berhad 10,800 86,400 41,412 7.75

Top Glove Corporation Bhd 4,300 69,230 29,845 6.21

24,700 255,735 134,366 22.94

Industrials

Gamuda Berhad 10,268 37,375 37,669 3.35

Information technology

Globetronics Technology Bhd. 12,400 26,536 27,452 2.38

Materials

Tek Seng Holdings Berhad 40,900 23,313 24,643 2.09

Telecommunication services

Telekom Malaysia Berhad 12,000 49,800 48,548 4.47

24

AmASEAN Equity



4. SHARIAH-COMPLIANT INVESTMENTS (CONT’D.)

Fair

value as aFair Purchased percentage

Name of company Number value cost of NAV of shares RM RM %

2020 (cont’d.)

(a) Quoted Shariah-compliant equity securities - local (cont’d.)

Utilities

Malakoff Corporation Berhad 36,500 33,215 32,339 2.98

Mega First Corporation

Berhad 4,000 25,120 17,855 2.25

Tenaga Nasional Berhad 4,200 48,804 52,985 4.38

44,700 107,139 103,179 9.61

Total quoted Shariah-compliant equity securities - local 199,568 547,464 416,589 49.10

(b) Quoted Shariah-compliant equity securities - foreign

Indonesia


PT Telekomunikasi Indonesia

(Persero) Tbk 55,200 50,306 63,535 4.51

Total in Indonesia 55,200 50,306 63,535 4.51

Philippines

Consumer staples

Century Pacific Food, Inc. 20,400 25,624 25,675 2.30

Total in Philippines 20,400 25,624 25,675 2.30

Singapore

Industrials

Singapore Technologies

Engineering Ltd. 2,700 27,346 28,887 2.45

Total in Singapore 2,700 27,346 28,887 2.45

25

AmASEAN Equity




Fair

value as aNumber of Fair Purchased percentage

Name of company shares/units value cost of NAV

RM RM %

2020 (cont’d.)

(b) Quoted Shariah-compliant equity securities - foreign (cont’d.)

Thailand

Consumer staples

Carabao Group Public

Company Limited 2,900 41,822 12,473 3.75

Health care

Bangkok Chain Hospital

Public Company Limited 13,800 28,704 23,032 2.57

Industrials

Airports of Thailand Public

Company Limited 6,400 53,691 49,069 4.81

Real estate

Central Pattana Public

Company Limited 5,000 33,800 44,060 3.03

Total in Thailand 28,100 158,017 128,634 14.16

Total quoted Shariah-compliant equity securities - foreign 106,400 261,293 246,731 23.42

(c) Quoted CIS - local

REIT

Axis Real Estate Investment

Trust 31,300 64,478 60,409 5.78

Total quoted CIS - local 31,300 64,478 60,409 5.78

Total financial assets at FVTPL 337,268 873,235 723,729 78.30

Excess of fair value over purchased cost 149,506

26

AmASEAN Equity




Fair



RM RM %

2019

(a) Quoted Shariah-compliant equity securities - local

Malaysia

Consumer discretionary

DRB-HICOM Berhad 12,200 26,840 22,936 2.37

Consumer staples

Felda Global Ventures

Holdings Berhad 19,700 22,064 22,458 1.95

NTPM Holdings Berhad 48,300 20,528 20,745 1.81

QL Resources Berhad 3,300 22,572 16,148 2.00

71,300 65,164 59,351 5.76

Energy

CARIMIN Petroleum Berhad 13,600 12,036 11,370 1.06

Dayang Enterprise Holdings

Bhd. 9,400 11,092 11,148 0.98

Yinson Holdings Berhad 11,900 72,471 54,047 6.41

34,900 95,599 76,565 8.45

Health care

Hartalega Holdings Berhad 10,300 53,972 55,105 4.77

Top Glove Corporation Bhd 5,400 26,514 26,320 2.36

15,700 80,486 81,425 7.13

Industrials

Gabungan AQRS Berhad 18,500 25,160 23,014 2.22

Gamuda Berhad 3,100 11,656 9,104 1.03

IJM Corporation Berhad 11,400 27,360 22,778 2.42

Pestech International Berhad 18,000 19,980 20,700 1.77

51,000 84,156 75,596 7.44


Telekom Malaysia Berhad 9,200 36,800 33,095 3.25

Utilities

Tenaga Nasional Berhad 3,500 48,440 48,062 4.28

27

AmASEAN Equity




Fair



RM RM %

2019 (cont’d.)

(a) Quoted Shariah-compliant equity securities - local (cont’d.)

Malaysia (cont’d.)

Total quoted Shariah-compliant equity securities - local 197,800 437,485 397,030 38.68

(b) Quoted Shariah-compliant equity securities - foreign

Indonesia

Consumer staples

PT Unilever Indonesia Tbk 2,700 35,514 35,494 3.14

Materials

PT Semen Indonesia (Persero)

Tbk 6,500 21,992 20,558 1.94


PT Telekomunikasi Indonesia

Tbk 57,000 68,976 65,538 6.10

Total in Indonesia 66,200 126,482 121,590 11.18

Philippines

Materials

D&L Industries, Inc. 49,100 41,390 44,211 3.66

Real estate

Ayala Land Inc. 13,800 56,497 48,096 5.00

Total in Philippines 62,900 97,887 92,307 8.66

28

AmASEAN Equity




Fair



RM RM %

2019 (cont’d.)

(b) Quoted Shariah-compliant equity securities - foreign (cont'd.)

Singapore

Industrials

ComfortDelGro Corporation Limited 4,600 37,350 27,878 3.30

Singapore Technologies

Engineering Limited 2,700 34,121 28,887 3.02

Total in Singapore 7,300 71,471 56,765 6.32

Thailand

Consumer staples

Carabao Group Public

Company Limited 2,900 28,675 12,472 2.54

Health care

Bangkok Chain Hospital

Public Company Limited 13,800 30,818 23,032 2.72

Industrials

Airports of Thailand Public

Company Limited 5,600 55,372 40,785 4.90

Information technology

KCE Electronics Public

Company Limited 4,000 10,224 14,629 0.90

Real estate

Central Pattana Public

Company Limited 5,000 50,448 44,060 4.46

Total in Thailand 31,300 175,537 134,978 15.52

Total quoted Shariah-compliant equity securities - foreign 167,700 471,377 405,640 41.68

Total financial assets at FVTPL 365,500 908,862 802,670 80.36

Excess of fair value over purchased cost 106,192

29

AmASEAN Equity



5. DEPOSITS WITH FINANCIAL INSTITUTIONS

2020 2019

RM RM

At nominal value:

Short-term deposits with licensed Islamic banks 253,000 257,000

At carrying value:

Short-term deposits with licensed Islamic banks 253,013 257,021

Details of deposits with financial institutions are as follows:

Carrying

value as a Maturity Nominal Carrying percentage date Bank value value of NAV

RM RM %

2020

Short-term deposits with licensed Islamic banks

01.07.2020 CIMB Islamic Bank Berhad 146,000 146,007 13.09

RHB Islamic Bank erhad 107,000 107,006 9.60

253,000 253,013 22.69

2019

Short-term deposits with licensed Islamic banks

01.07.2019 CIMB Islamic Bank Berhad 157,000 157,013 13.88

Maybank Islamic Berhad 100,000 100,008 8.84

257,000 257,021 22.72

2020 2019 2020 2019

% % Day Day

Short-term deposits with

licensed Islamic banks 1.87 2.93 1 1

effective profit rate maturity

01.07.2020

01.07.2019

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

deposit are as follows:

Weighted average Remaining

30

AmASEAN Equity



6. AMOUNT DUE TO MANAGER

2020 2019Note RM RM

Due to Manager

Redemption of units (i) - 6,578

Manager’s fee payable (ii) 1,910 1,643

1,910 8,221

(i)

(ii)

7. AMOUNT DUE TO TRUSTEE

8. AMOUNT DUE TO BROKERS

Amount due to brokers relates to the amount payable to brokers arising from the purchase of

Shariah-compliant investments. The settlement period is within two business days from the

deal date.

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

one month.

The amount represents amount payable to the Manager for units redeemed.

The normal credit period in the previous and current financial year for redemption of units

is three business days.

Manager’s fee is at a rate of 1.80% (2019: 1.80%) per annum on the NAV of the Fund,

calculated on a daily basis.

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

payable is one month.

Trustee’s fee is at a rate of 0.06% (2019: 0.06%) per annum on the NAV of the Fund,

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

31

AmASEAN Equity



9. NET GAIN FROM SHARIAH-COMPLIANT INVESTMENTS

2020 2019

RM RM

Net gain on financial assets at FVTPL comprised:

− Net realised loss on sale of Shariah-compliant

investments (5,641) (403)

− Net realised gain/(loss) on foreign currency exchange 3,301 (52,430)

− Net unrealised gain on changes in fair values of

Shariah-compliant investments 40,200 97,840

− Net unrealised gain on foreign currency fluctuation

of Shariah-compliant investments denominated in

foreign currency 3,114 75,979

40,974 120,986

10. TOTAL EQUITY

Total equity is represented by:

2020 2019

Note RM RM

Unit holders’ capital (a) (1,888,085) (1,876,811)

Retained earnings

− Realised income (b) 2,853,811 2,901,700

− Unrealised gain (c) 149,508 106,194

1,115,234 1,131,083

(a) Unit holders’ capital/units in circulation

Number of Number of

units RM units RM

At beginning of the

financial year 2,299,804 (1,876,811) 4,344,061 (914,635)

Creation during the

financial year 1,279,115 615,067 76,765 35,672

Cancellation during the

financial year (1,341,718) (626,341) (2,121,022) (997,848)At end of the financial year 2,237,201 (1,888,085) 2,299,804 (1,876,811)

2020

The negative balance of unit holders’ capital is due to the cancellation of units at a higher

NAV per unit following the price appreciation of the Fund as compared to the units being

created at a lower NAV per unit in prior years.

2019

32

AmASEAN Equity



10. TOTAL EQUITY (CONT’D.)

(b) Realised – distributable

2020 2019

RM RM

At beginning of the financial year 2,901,700 2,984,693

Net realised loss for the financial year (47,889) (82,993)At end of the financial year 2,853,811 2,901,700

(c) Unrealised – non-distributable

2020 2019

RM RM

At beginning of the financial year 106,194 (67,643)

Net unrealised gain for the financial year 43,314 173,837 At end of the financial year 149,508 106,194

11. UNITS HELD BY RELATED PARTIES

Related parties Relationship

AmFunds Management Berhad The Manager

AmInvestment Bank Berhad Holdings company of the Manager

AMMB Holdings Berhad Ultimate holding company of the Manager

Subsidiaries and associates of Subsidiaries and associate companies of

AMMB as disclosed in its the ultimate holding company of the

financial statements Manager

12. INCOME TAX

2020 2019

RM RM

Current financial year - local tax 50 -

Current financial year - foreign tax 1,059 1,690

1,109 1,690

The Manager and parties related to the Manager did not hold any units in the Fund as at 30

June 2020 and 30 June 2019.

The related parties and their relationship with the Fund are as as follows:

33

AmASEAN Equity



12. INCOME TAX (CONT’D.)

2020 2019

RM RM


Taxation at Malaysian statutory rate of 24% (2019: 24%) (832) 22,208

Tax effects of:

Income not subject to tax (15,726) (49,636)

Effect of different tax rate (574) (489)

Loss not allowed for tax deduction 1,354 12,680

Restriction on tax deductible expenses for unit trust fund 6,305 7,551

Non-permitted expenses for tax purposes 9,882 8,537

Permitted expenses not used and not available for future

financial years 700 839 Tax expense for the financial year 1,109 1,690

13. DISTRIBUTION

14. MANAGEMENT EXPENSE RATIO (“MER”)

The Fund’s MER is as follows:

2020 2019

% p.a. % p.a.

Manager’s fee 1.80 1.80

Trustee’s fee 0.93 0.69

Fund’s other expenses 2.84 1.80 Total MER 5.57 4.29

The MER of the Fund is the ratio of the sum of annualised fees and expenses incurred by the

Fund to the average NAV of the Fund calculated on a daily basis.

No distribution was declared by the Fund for the financial years ended 30 June 2020 and 30

June 2019.

A reconciliation of income tax expense applicable to net (loss)/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:

Pursuant to Schedule 6 of the Income Tax Act 1967, provided that the exemption shall not

apply to the profit paid or credited to a unit trust that is a wholesale fund which is a money

market fund. Profit income earned by Funds other than wholesale money market fund is

exempted from tax.

Income tax payable is calculated on Shariah-compliant investment income less deduction for

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

34

AmASEAN Equity



15. PORTFOLIO TURNOVER RATIO (“PTR”)

16. SEGMENTAL REPORTING

− A portfolio of Shariah-compliant equity instruments; and

−

Fixed Fixed

Equity income Equity income

portfolio portfolio Total portfolio portfolio Total

RM RM RM RM RM RM

Gross dividend/

distribution income 20,841 - 20,841 34,634 - 34,634

Profit income - 5,084 5,084 - 7,425 7,425

Net gain from

investments:

‒ Financial assets

at FVTPL 40,974 - 40,974 120,986 - 120,986

Other unrealised

foreign exchangegain - - - 18 - 18

Total segment

investment income

for the financial year 61,815 5,084 66,899 155,638 7,425 163,063

The PTR of the Fund, which is the ratio of average total acquisitions and disposals of

Shariah-compliant investments to the average NAV of the Fund calculated on a daily basis,

is 1.23 times (2019: 0.79 times).

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 Shariah-compliant fixed income instrument, including deposits with

financial institutions.

The investment objective of each segment is to achieve consistent returns from the Shariah-

compliant investments in each segment while safeguarding capital by investing in diversified

portfolios. There have been no changes in reportable segments in the current financial year.

The segment information provided is presented to the Manager and Investment Committee

of the Fund.

2020 2019

35

AmASEAN Equity



16. SEGMENTAL REPORTING (CONT’D.)

Fixed Fixed

Equity income Equity income

portfolio portfolio Total portfolio portfolio Total

RM RM RM RM RM RM

Financial assets at

FVTPL 873,235 - 873,235 908,862 - 908,862

Dividends receivable 3,320 - 3,320 3,202 - 3,202

Deposits with financial

institutions - 253,013 253,013 - 257,021 257,021

Total segment assets 876,555 253,013 1,129,568 912,064 257,021 1,169,085

Amount owing to

brokers - - - 41,567 - 41,567

Total segment liabilities - - - 41,567 - 41,567

2020 2019

RM RM

Net reportable segment investment income 66,899 163,063

Less: Expenses (70,365) (70,529)


Less: Income tax (1,109) (1,690)Net (loss)/income after tax (4,575) 90,844

2020 2019

RM RM

Total segment assets 1,129,568 1,169,085

Cash at banks 2,485 26,891 Total assets of the Fund 1,132,053 1,195,976

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 (loss)/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.

2020 2019

36

AmASEAN Equity



16. SEGMENTAL REPORTING (CONT’D.)

2020 2019

RM RM

Total segment liabilities - 41,567

Amount due to Manager 1,910 8,221

Amount due to Trustee 875 822

Sundry payables and accrued expenses 14,034 14,283 Total liabilities of the Fund 16,819 64,893

17. TRANSACTIONS WITH BROKERS AND FINANCIAL INSTITUTIONS

Brokerage fee, stamp

Brokers/Financial institutions Transaction value duty and clearing fee

RM % RM %

AmInvestment Bank Berhad* 667,869 25.29 2,689 24.49

Macquarie Capital Securities

(Malaysia) Sdn. Bhd. 520,644 19.73 1,970 17.94

Maybank Investment Bank Berhad 488,337 18.50 2,134 19.43

Daiwa Securities SMBC Hong Kong Ltd 225,802 8.55 1,038 9.45

CIMB GK Securities (HK) Ltd 160,881 6.09 442 4.02

Hong Leong Investment Bank Berhad 157,215 5.95 545 4.96

Alliance Investment Bank Berhad 146,358 5.54 671 6.11

Affin Hwang Investment Bank Berhad 62,380 2.36 276 2.51

CLSA Securities Malaysia Sdn. Bhd 56,658 2.15 275 2.51

UOB Kay Hian Securities Ltd 40,609 1.54 404 3.68

Other brokers and financial institutions 113,572 4.30 538 4.90

Total 2,640,325 100.00 10,982 100.00

*

The above transaction values were in respect of Shariah-compliant listed securities.

Details of transactions with brokers and financial institutions for the financial year ended 30

June 2020 are as follows:

A financial institution related to the Manager. The Manager is of the opinion that the

above transactions have been entered in the normal course of business and have been

established under terms that are no less favourable than those arranged with

independent third parties.

37

AmASEAN Equity



18. FINANCIAL INSTRUMENTS

(a) Classification of financial instruments

Financial Financial

Financial assets at liabilities at

assets at amortised amortised

FVTPL cost cost Total

RM RM RM RM

AssetsShariah-compliant

investments 873,235 - - 873,235

Dividends receivable - 3,320 - 3,320


institutions - 253,013 - 253,013

Cash at banks - 2,485 - 2,485

Total financial assets 873,235 258,818 - 1,132,053

Liabilities

Amount due to Manager - - 1,910 1,910

Amount due to Trustee - - 875 875

Sundry payables and accrued

expenses - - 14,034 14,034

Total financial liabilities - - 16,819 16,819

AssetsShariah-compliant

investments 908,862 - - 908,862

Dividends receivable - 3,202 - 3,202


institutions - 257,021 - 257,021

Cash at banks - 26,891 - 26,891

Total financial assets 908,862 287,114 - 1,195,976

Liabilities

Amount due to Manager - - 8,221 8,221

Amount due to Trustee - - 822 822

Amounts due to brokers - - 41,567 41,567

Sundry payables and accrued

expenses - - 14,283 14,283

Total financial liabilities - - 64,893 64,893

2019

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.

2020

38

AmASEAN Equity



18. FINANCIAL INSTRUMENTS (CONT’D.)

(a) Classification of financial instruments (cont’d.)

2020 2019

RM RM

Net gain from financial assets at FVTPL 40,974 120,986

Income, of which derived from:

– Gross dividend income from financial

assets at FVTPL 20,841 34,634

– Profit income from financial assets at amortised cost 5,084 7,425

– Other unrealised foreign exchange gain - 18

(b) Financial instruments that are carried at fair value

Level 1:

Level 2:

Level 3:

Level 1 Level 2 Level 3 Total

RM RM RM RM

873,235 - - 873,235

908,862 - - 908,862

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

financial instruments by valuation technique:

2019



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

2020

Income, expense, gains

and losses

39

AmASEAN Equity



18. FINANCIAL INSTRUMENTS (CONT’D.)

(c)

• Dividends receivable

• Deposits with financial institutions

• Cash at banks

• Amount due to Manager

• Amount due to Trustee

• Amount due to brokers

• Sundry payables and accrued expenses

19. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

(a) Market risk

The Fund’s principal exposure to market risk arises primarily due to changes in the

market environment, global economic and geo-political developments.

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/Shariah non-compliance risk.

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:

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.

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

said risks, careful selection of Shariah-compliant investments coupled with stringent

compliance to Shariah-complaint investments 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.

Financial markets have experienced and may continue to experience significant

volatility resulting from the spread of a novel coronavirus known as Covid-19. The

outbreak of Covid-19 has resulted in travel and border restrictions, quarantines, supply

chain disruptions, lower consumer demand and general market uncertainty. The

outcome of global and local financial markets are highly uncertain and cannot be

predicted at this point in time. Due to this, the Manager of the Fund is unable to reliably

estimate the quantitative impact of Covid-19 towards the Fund’s performance for the

next twelve months. The Manager of the Fund will continue to actively monitor the

developments in the market to minimise any potential impact to the Fund.

40

AmASEAN Equity



19. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D.)

(a) Market risk (cont’d.)

(i) Price risk

Percentage movements in

price by: 2020 2019

RM RM

(43,662) (45,443)

43,662 45,443

(ii) Profit rate risk

Parallel shift in yield

curve by: 2020 2019

RM RM

+100bps (7) (21)

-100bps 7 21

Sensitivity of the Fund’s

NAV

-5.00%

+5.00%

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:

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

Shariah-compliant investments. In managing price risk, the Manager actively

monitors the performance and risk profile of the investment portfolio.


NAV, or theoretical value

Profit rate risk will affect the value of the Fund’s Shariah-compliant investments,

given the profit rate movements, which are influenced by regional and local

economic developments as well as political developments.

Domestic profit rates on deposits and placements with licensed financial

institutions are determined based on prevailing market rates.

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

theoretical value due to the parallel movement assumption of the yield curve by

+100bps and -100bps respectively:

The Funds’s market risk is affected primarily by the following risks:

41

AmASEAN Equity





(iii) Currency risk

Percentage movements in

currencies other than the

Fund's functional currency: 2020 2019

RM RM

-5.00% (13,166) (24,935)

+5.00% 13,166 24,935

Assets RM % of RM % of

denominated in equivalent NAV equivalent NAV

Indonesian Rupiah

Shariah-compliant

investments 50,306 4.51 126,482 11.18

Dividend receivable 2,034 0.18 2,182 0.19

52,340 4.69 128,664 11.37

Philippine Peso

Shariah-compliant

investments 25,624 2.30 97,887 8.66

Dividends receivable - - 792 0.07

25,624 2.30 98,679 8.73

Singapore Dollar

Shariah-compliant

investments 27,346 2.45 71,471 6.32

Cash at bank - - 24,346 2.15

27,346 2.45 95,817 8.47


NAV

20192020

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 of the Fund that are not denominated in Fund’s

functional currency are as follows:

42

AmASEAN Equity





(iii) Currency risk (cont’d.)

Assets RM % of RM % of

denominated in equivalent NAV equivalent NAV

Thailand Baht

Shariah-compliant

investments 158,017 14.17 175,537 15.52

Cash at bank 1 -* 1 -*

158,018 14.17 175,538 15.52

* represents less than 0.01%

(b) Credit risk

(c) Liquidity risk

Liquidity risk is defined as the risk that the Fund will encounter difficulty in meeting

obligations associated with financial liabilities that are settled by delivering cash or

another financial asset. Exposure to liquidity risk arises because of the possibility that

the Fund could be required to pay its liabilities or redeem its units earlier than expected.

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

to meet anticipated payments and cancellations of units by unit holders. 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.

The Fund’s financial liabilities have contractual maturities of not more than six months.

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.

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 Islamic short-

term deposits and dividends receivable. The issuer of such instruments may not be

able to fulfill the required profit payments or repay the principal invested or amount

owing. These risks may cause the Fund’s Shariah-compliant investments to fluctuate in

value.

2020 2019

43

AmASEAN Equity




(d) Single issuer risk

(e) Regulatory risk

(f) Country risk

(g) Management risk

(h) Non-compliance/Shariah non-compliance risk

20. CAPITAL MANAGEMENT

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

market and the NAV of the Fund.

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

more than a certain percentage of its NAV. Under such restriction, the risk exposure to

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

ratings.

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. In

the case of an Islamic Fund, this includes the risk of the Fund not conforming to

Shariah Investment Guidelines. Non-compliance risk may adversely affect the Shariah-

compliant investments of the Fund when the Fund is forced to rectify the non-

compliance.

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

may affect the NAV of the Fund.

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

ended 30 June 2020 and 30 June 2019.

The primary objective of the Fund’s capital management is to ensure that it maximises unit

holders’ value by expanding its fund size to benefit from economies of scale and achieving

growth in NAV from the performance of its Shariah-compliant investments.

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

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

bonus units, make distribution payment, or return capital to unit holders by way of

redemption of units.

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 possibility that the NAV of

the Fund may be adversely affected.

44

AmASEAN Equity

STATEMENT BY THE MANAGER

For and on behalf of the Manager

Executive Director

Kuala Lumpur, Malaysia

24 August 2020

I, Goh Wee Peng, as the Director of AmFunds Management Berhad (the “Manager”), do hereby

state that in the opinion of the Manager, the accompanying financial statements 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 AmASEAN Equity (the

“Fund”) as at 30 June 2020 and the comprehensive income, the changes in equity and cash

flows for the financial year then ended and comply with the requirements of the Deeds.

GOH WEE PENG

45

TRUSTEE’S REPORT

TO THE UNIT HOLDERS OF AMASEAN EQUITY

(a)

(b)

(c)

Richard Lim Hock Seng

Chief Executive Officer

Kuala Lumpur

Ng Hon Leong

Head, Trustee Operations

24 August 2020

We have acted as Trustee of AmASEAN Equity (the “Fund”) for the financial year ended 30 June

2020. To the best of our knowledge, for the financial year under review, AmFunds Management

Berhad (the “Manager”) has operated and managed the Fund in accordance with the following:-

limitations imposed on the investment powers of the Manager under the Deed(s), the

Securities Commission’s Guidelines on Unit Trust Funds, the Capital Markets and Services

Act 2007 and other applicable laws;

valuation and pricing for the Fund is carried out in accordance with the Deed(s) of the

Fund and any regulatory requirements; and

creation and cancellation of units for the Fund are carried out in accordance with the

Deed(s) of the Fund and any regulatory requirements.

For Deutsche Trustees Malaysia Berhad

46

47

REPORT OF THE SHARIAH ADVISER TO THE UNITHOLDERS of AmASEAN Equity For The Financial Year Ended 30 June 2020 We have acted as the Shariah Adviser of AmASEAN Equity. Our responsibility is to ensure that the

procedures and processes employed by AmIslamic Funds Management Sdn Bhd and that the provisions

of the AmMaster Deed dated 9 March 2011 and its supplemental deeds (if any) are in accordance with

Shariah principles.

In our opinion, AmIslamic Funds Management Sdn Bhd has managed and administered AmASEAN

Equity in accordance with Shariah principles and complied with applicable guidelines, rulings or

decisions issued by the Securities Commission (SC) pertaining to Shariah matters. We confirm that the

investment portfolio of the Fund comprises securities and/or instruments which have been classified as

Shariah compliant by the Shariah Advisory Council (SAC) of the SC and/or Shariah Advisory Council

(SAC) of Bank Negara Malaysia (BNM), where applicable. For securities and/or instruments which are

not classified as Shariah-compliant by the SAC of the SC and/or SAC of BNM, we have determined that

such securities and/or instruments are in accordance with Shariah principles and have complied with the

applicable Shariah guidelines.

For Amanie Advisors Sdn Bhd ………………………………………….. Datuk Dr Mohd Daud Bakar Executive Chairman 24 August 2020

48

DIRECTORY Head Office 9th & 10th Floor, Bangunan AmBank Group 55, Jalan Raja Chulan, 50200 Kuala Lumpur Tel: (03) 2032 2888 Facsimile: (03) 2031 5210 Email: [email protected] Postal Address The Administrator

AmFunds Management Berhad P.O Box 13611, 50816 Kuala Lumpur

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 - Thursday),

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

03 2032 2888 | aminvest.com | [email protected] m

AmFunds Management Berhad 198601005272 (154432-A)

Documents

Annual Report for AmASEAN Equity - AmInvest€¦ · 16 Notes to the Financial Statements 45 Statement by the Manager 46 Trustee’s Report 47 Report of the Shariah Adviser to the