FRANKLIN MALAYSIA SUKUK FUND - · PDF filePolicy Rate (OPR) and Statutory Reserve Requirement (SRR) ratio unchanged in the last 12 months. ... FRANKLIN MALAYSIA SUKUK FUND . FRANKLIN

FRANKLIN MALAYSIA SUKUK FUND

Audited Annual Report 30 September 2017


AUDITED ANNUAL REPORT FOR THE FINANCIAL PERIOD FROM 1 OCTOBER 2016 TO 30 SEPTEMBER 2017

I. GENERAL INFORMATION ABOUT THE FUND

II. MANAGER’S REPORT

III. FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2017


i

I. GENERAL INFORMATION ABOUT THE FUND

Launch and Commencement Date The Franklin Malaysia Sukuk Fund (the “Fund”) was launched on 18 November 2015 and commenced its operations on 9 December 2015.

Fund Name, Category, Type

Fund Name Franklin Malaysia Sukuk Fund

Fund Category Sukuk

Fund Type Growth and income

Share Classes Class A (MYR) and Class I (MYR)

Performance Benchmark

Thomson Reuters Bond Pricing Agency Malaysia (BPAM) 3-7 year Sukuk Index

Please note that the risk profile of the Fund may be higher than the risk profile of the benchmark

Distribution Policy

Class A (MYR) – Subject to the availability of income, distribution is atleast on a yearly basis. However, the Manager currently intends todistribute on a quarterly basis.

Class I (MYR) – Subject to the availability of income, distribution is atleast on a yearly basis.

*Distributions (if any) may be paid by cash or reinvested as additionalUnits of the Fund

Investment Objective The Fund is a retail unit trust fund that seeks to maximise total investment return consisting of profit income* and capital gains in the long term through investments primarily in RM-denominated sukuk.

Investment Policy and Strategy The Fund seeks to achieve its objective by investing a minimum of 70% of its NAV in RM-denominated sukuk which are issued or guaranteed by governments, quasi-government entities and/or government related entities, or issued by corporate entities which are incorporated or domiciled anywhere in the world.

The Fund may also invest up to 20% of its NAV in non RM-denominated Islamic Instruments such as non RM-denominated sukuk, Islamic commercial papers, Islamic negotiable instruments, short term Islamic money market instruments, Islamic deposits and/or any other fixed income investments which comply with the Shariah Principles which are issued or guaranteed by governments, quasi-government entities and/or government related entities, or issued by corporate entities incorporated or domiciled in the Asian region (which includes, without limitation, Singapore, Indonesia, China, Hong Kong, Japan and Brunei). The fund manager may also invest the NAV of the Fund in any other countries worldwide (where the regulatory authority of the countries in which the Fund invests is an ordinary or associate member of the IOSCO) if the fund manager sees a potential in the Islamic fixed income market in those countries. The Fund’s maximum exposure to any single country other than Malaysia shall not exceed 15% of the Fund’s NAV at the time of purchase. In addition, the Fund’s investment in non RM-denominated Islamic Instruments may include non RM-denominated units of Shariah-compliant fixed-income collective investment schemes (including ETFs).

The balance of the Fund’s NAV not invested in RM-denominated sukuk and non RM-denominated Islamic Instruments will be invested in Other RM-denominated Islamic Instruments such as RM-denominated Islamic commercial papers, RM-denominated Islamic negotiable instruments issued or guaranteed by governments, quasi-government entities and/or government related entities, or issued by corporate entities which are incorporated or domiciled anywhere in the world and RM-denominated Islamic Liquid Assets such as short term Islamic money market instruments, Islamic deposits and/or cash. At least 2% of the Fund’s NAV will comprise of RM-denominated Islamic Liquid Assets, for purposes of (including but are not limited to) meeting redemption requests, meeting liquidity needs and/or defraying Fund expenses. The Manager may adopt temporary defensive strategies by lowering the Fund’s exposure to RM-denominated sukuk below the stated


ii

defensive strategies by lowering the Fund’s exposure to RM-denominated sukuk below the stated minimum 70% of its NAV and by increasing the Fund’s exposure to RM-denominated Islamic Liquid Assets in adverse market conditions or if the fund manager is of the view that investments in RM-denominated Islamic Liquid Assets during such period may offer more attractive investment opportunities compared to investments in sukuk.

The fund manager targets to build a portfolio of RM-denominated and non RM-denominated instruments which, at the time of purchase, have a minimum credit rating of BBB3 by RAM or have an equivalent credit rating by MARC or any other recognised credit rating agency. If an instrument is not rated, it may be added to the portfolio of the Fund if, at the time of purchase, the issuer of the instrument has a minimum credit rating of BBB3 by RAM or has an equivalent credit rating by MARC or any other recognised credit rating agency. If an instrument and its issuer are both unrated, the instrument may be added to the portfolio of the Fund if, at the time of purchase, the instrument is assigned an internal rating which in the opinion of the Manager is the equivalent of (or higher than) BBB3 by RAM or an equivalent credit rating by MARC or any other recognised credit rating agency in accordance with its internal guidelines.

If an instrument that the Fund invests in falls below the minimum credit rating stated above or goes into default, the Manager may either dispose of the instrument if the Manager is of the opinion that it is in the best interest of Unit Holders, or continue to hold on to the downgraded or defaulted instrument if the Manager is of the opinion that the immediate disposal of the instrument would not be in the best interest of Unit Holders.

While foreign exchange is not expected to be a primary source of returns for the Fund, it may potentially generate some returns as the Fund may invest up to 20% of its NAV in non RM-denominated Islamic Instruments. On the other hand, the value of the Fund’s investments in non RM-denominated Islamic Instruments may depreciate due to movements in the exchange rate between Ringgit Malaysia and the currency of the foreign countries that the Fund invests in. The performance and the NAV of the Fund may be adversely affected as a result of such currency loss. The Manager may also employ Shariah-compliant hedging instruments to reduce the Fund’s exposure to foreign exchange fluctuations and for efficient portfolio management from time to time. The hedging tools that the Manager may utilise include, but are not limited to, Islamic foreign exchange forwards and profit rate swaps.

The Manager’s investment process uses a mix of bottom up, top down and quantitative approaches.

ASSET ALLOCATION

A minimum of 70% of its NAV in RM-denominated sukuk

Up to 20% of its NAV in non RM-denominated Islamic Instruments

At least 2% of its NAV in RM-denominated Islamic Liquid Assets; and

The balance of its NAV, not invested in RM-denominated sukuk, non RM-denominatedIslamic Instruments or RM-denominated Islamic Liquid Assets, in Other RM-denominatedIslamic Instruments;

where:

a. “non RM-denominated Islamic Instruments” include:i) non RM-denominated sukuk;ii) non RM-denominated Islamic commercial papers;iii) non RM-denominated Islamic negotiable instruments;iv) non RM-denominated short term Islamic money market instruments;v) non RM-denominated Islamic deposits;vi) non RM-denominated units of Shariah-compliant fixed-income collective investment

schemes including ETFs); and/orvii) any other non RM-denominated fixed income investments which comply with the

Shariah Principles which are issued or guaranteed by governments, quasi-government entities and/or government related entities, or issued by corporateentities which are incorporated or domiciled in the Asian region (which includes,without limitation, Singapore, Indonesia, China, Hong Kong, Japan and Brunei), or


iii

in any other countries worldwide (where the regulatory authority of the countries in which the Fund invests is an ordinary or associate member of the IOSCO) if the fund manager sees a potential in the Islamic fixed income market in those countries.

b. “RM-denominated Islamic Liquid Assets” include RM-denominated short term Islamicmoney market instruments, Islamic deposits and/or cash; and

c. “Other RM-denominated Islamic Instruments” include:i) RM-denominated Islamic commercial papers;ii) RM-denominated Islamic negotiable instruments; and/oriii) any other RM-denominated fixed income investments which comply with the

Shariah Principles.


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II. MANAGER’S REPORT

MARKET REVIEW

While the fund experienced a rough first quarter (October–December 2016 or Q1), the Malaysia bond market stabilised for most parts in 2017. Malaysia’s sovereign bond and domestic sukuk markets were not spared from external volatility, especially in the first quarter of 2017, following Donald Trump’s victory in the United States (US) Presidential election in November 2016. The initial knee-jerk reaction pushed Malaysia’s sovereign bond yields up by as much as 80-100 basis points (bps) in November 2016, mirroring the spike in US Treasury yields following the US electoral result. The Malaysian Ringgit (MYR) also depreciated by 6.9% to MYR4.49 per US Dollar (USD) from MYR4.20 per USD over the November-December 2016 period, as did other Emerging Market (EM) currencies on concerns that the Trump administration may pursue protectionist trade policies, although the weakening in the MYR was exacerbated by Bank Negara Malaysia (BNM)’s announcement on the foreign exchange market to remove the influence of offshore US Dollar-Malaysian Ringgit (USDMYR) non-deliverable forward towards an onshore spot USDMYR rate, a move to stabilise the MYR and boost external reserves. However, this sparked further selling by foreign investors in the Malaysian Government Securities (MGS) segment as they found it difficult to hedge their currency positions.

While performance in the Malaysian conventional bond and sukuk markets was negatively skewed in Q1, bond yields improved in the later parts of 2017. The sovereign yield curve steepened initially with the 10-year MGS above 4.40% in November from a low range of 3.54% in October. However, the MGS recovered soon after, averaging at 4.20% by December and has not seen huge spikes since.

Between May 2017 and the end of the fiscal year, the 10-year MGS were trending below 4.05%. Similarly in the sukuk market, the Malaysian Government Investment Issues (MGIIs) rallied as investors searched for attractive yield-duration arbitrage within the bond market. BNM kept both the Overnight Policy Rate (OPR) and Statutory Reserve Requirement (SRR) ratio unchanged in the last 12 months. This was supportive for the bond market, and the sovereign bond curve remained flattish with the 10-year/3-year hovering around 50-55bps for most of 2017. The MGS and MGII markets had traded range bound since the January-February rally, with healthy trading volumes throughout the first nine months of 2017.

While on the one hand, investors remained cautious of a new interest rate hiking cycle in the US, which, combined with robust domestic gross domestic product (GDP) growth added upward pressure on local bond yields. On the other hand, the declining inflation trend in Malaysia, coupled with stable OPR trend in 2017 has so far supported domestic bond prices. In addition, the widening of the current account surplus and strengthening of foreign reserves to surpass the USD100 billion (bn) in September 2017 were also conducive to more stable bond yields.

Additionally, this has spurred various corporate sukuk issuance in the primary market. Total corporate bonds issued in MYR was MYR102.4 bn for the 12-month period, the highest ever recorded since 2012. MYR corporate bond issuance was 27% higher year-on-year (YoY) for the first nine months of 2017 at MYR83.4 bn, driven by Government-guaranteed issuances (41% of total issuance). Infrastructure and utilities bonds issuance came second in terms of size, reflecting the government’s thrust on infrastructure spending to boost the economic activity. The secondary market liquidity in corporate bonds improved on a YoY basis as well, and high yielding bonds continue to be in high demand. Notably, total MYR sukuk accounted for 58% of total outstanding MYR bonds in Malaysia as at September 2017.

Foreign holdings of MGS begun to unwind from the highs in October 2016 at 52% (highest since 2010), mainly due to the thematic selloff across EM. At their lows, foreign holdings in MGS stood at 38.5%, recorded in March 2017. For the 6-month period from October to March 2017, total outflows in MGS alone stood at MYR49 bn. Similarly, the MYR remained weak in the 6-month period to March 2017, despite signs of improving economic fundamentals. In April, BNM announced a number of measures to improve liquidity in the bond market including relaxing the foreign exchange framework in April, which had a positive impact on the MYR and as such, MYR started to appreciate in a meaningful way, and foreign interest in the MGS begun to pick-up, albeit slowly. As at September 2017, foreign holdings in MGS stood at 42.3% or MYR156.71 bn. From April through September, the MGS and MGII segments experienced net inflows of almost MYR20 bn.


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MANAGER’S REPORT (CONTINUED)

Economic growth was robust in first half of 2017, with the Malaysian economy expanding by 5.7% YoY compared to 4.1% in Q1 of 2016 and 4.0% in the second quarter (Q2) of 2016, thus surpassing consensus forecasts, including the World Bank’s, as exports picked up alongside a strong increase in domestic demand. GDP growth is expected to remain robust throughout 2017. Malaysia’s exports in nominal value have shown resilience this year, with the latest reading at 30.9% YoY in July, and growing by 22.3% year to date. This was driven by strong external demand and the weaker MYR, as well as recovering commodity prices. The current account surplus also rose to 3.0% of GDP, a significant improvement from 1.6% of GDP in Q1 of 2017.

REVIEW OF THE FUND PERFORMANCE DURING THE PERIOD

For the period under review, the Franklin Malaysia Sukuk Fund delivered a positive net return for both share classes; 3.88% for the Class I and 3.33% for the Class A, respectively, since its inception to 30 September 2017. Both Fund Classes outperformed its benchmark, the Thomson Reuters BPAM 3-7 Year Sukuk Index of 2.44% by 144bps and 89bps respectively, in net terms. Key contributors to relative performance included the Fund’s underweight allocation to government securities, as the asset class performed poorly during the period under review, as well as credit security selection.

During the period under review, the Fund also made four stable quarterly distributions of MYR0.0080 for the Class A, and one annual distribution of MYR0.0350 for the Class I, in net terms. Overall, the sukuk market performed well during the period under review.

MARKET OUTLOOK

While performance in the Malaysian conventional bond and sukuk markets has improved in the last 6 months, we expect some volatility as the world awaits the announcement of the next Fed Governor, which could stir US policy rate trends over the next four years. We are also cognisant of the potential worsening geopolitical unrest between North Korea and US and its allies. Oil price movements as well as China’s economic growth are also likely to continue to affect the global growth outlook.

Domestically, we expect growth to remain robust, with the Ministry of Finance (MOF) projecting a 5.0-5.5% GDP growth rate in 2018. As announced in the recent budget 2018, numerous initiatives have been planned to continue with infrastructure spending and spur consumer spending, which are expected to help boost domestic demand. With improved growth and potentially higher inflation trend, we expect the local markets to be more bullish in 2018, and the bond yields to be biased towards the upside. While policies should remain accommodative with a potential 25bps hike in 2018, we opine that yields are likely to move gradual. As GDP growth is likely to remain robust, we expect to continue to see healthy volumes of corporate issuances, in particular in infrastructure-related sectors.

PORTFOLIO POSITIONING

Our core strategy is to remain fully invested in Ringgit-denominated corporate sukuk as we find better opportunities to enhance the portfolio’s yield through credit exposure. We are currently neutral-to-underweight on duration, and bullish on attractive corporate credits likely to benefit from the recovering economic cycle, in our view.


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RETURNS AS OF 30 SEPTEMBER 2017

Cumulative Performance

Since Inception (8 December 2015)

Franklin Malaysia Sukuk Fund – Class A (MYR) 8.03%

Franklin Malaysia Sukuk Fund – Class I (MYR) 9.07%

Thomson Reuters BPAM 3-7 year Sukuk Index (MYR) 8.91%

Annual Total Return

1 Year Since Inception

(8 December 2015)

Franklin Malaysia Sukuk Fund – Class A (MYR) 3.33% 4.35%

Franklin Malaysia Sukuk Fund – Class I (MYR) 3.88% 4.91%

Thomson Reuters BPAM 3-7 year Sukuk Index (MYR)

2.44% 4.82%

Average Total Returns

1 Year Since Inception

(8 December 2015)

Franklin Malaysia Sukuk Fund – Class A (MYR) 0.27% 0.35%

Franklin Malaysia Sukuk Fund – Class I (MYR) 0.32% 0.40%

Thomson Reuters BPAM 3-7 year Sukuk Index (MYR)

0.21% 0.39%

The average total returns of the Funds are calculated based on its average total returns per month since its inception.

All performance data shown is in the currency stated, include reinvested dividends and are net of management fees. Sales charges and other commissions, taxes and other relevant costs paid by the investor are not included in the calculations.

PAST PERFORMANCE OF THE FUND IS NOT AN INDICATION OF ITS FUTURE PERFORMANCE.

STATEMENT ON SOFT COMMISSION

The Manager did not receive any soft commission for the period under review from any broker or Dealer


vii


Breakdown of Unitholdings by Size as of 30 September 2017

BREAKDOWN OF UNITHOLDINGS BY SIZE – CLASS A

Size of Unit Holdings (Units) No. of Unit Holders No. of Units Held (in Millions)

5,000 and below 0 0

5,001-10,000 0 0

10,001-50,000 1 0.04

50,001-500,000 1 0.06

500,001 and above 1 21.35

Total 3 21.45

BREAKDOWN OF UNITHOLDINGS BY SIZE – CLASS I

Size of Unit Holdings (Units) No. of Unit Holders No. of Units Held (in Millions)

5,000 and below 0 0

5,001-10,000 0 0

10,001-50,000 0 0

50,001-500,000 0 0

500,001 and above 1 1.03

Total 1 1.03

FUND PERFORMANCE DATA FOR THE FINANCIAL PERIOD FROM 1 OCTOBER 2016 TO 30 SEPTEMBER 2017

Portfolio composition of the fund

Details of portfolio composition of the Fund are as follows:

30 September 2017

30 September 2016

RM RM

Unquoted Sukuk 21,615,548 21,784,562

Cash and other net assets

1,586,452 706,048

23,202,000 22,490,610

As at 30 September 2017 As at 30 September 2016

Class A Class I Class A Class I

Total Net Asset Value (NAV) (RM)

22,111,234 1,090,766 21,440,668 1,049,942

NAV per Unit (RM) 1.0307 1.0544 1.0291 1.0499

Units in Circulation 21,453,105.42 1,034,509.96 20,834,367.92 1,000,000.00

Highest NAV per Unit (RM)

1.0307 1.0544 1.0291 1.0499

Lowest NAV per Unit (RM)

1.0103 1.0142 1.0000 1.0000


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Total Return (%) 3.33 3.88 4.54 4.99

- Capital Return (%) 0.16 0.43 2.91 4.99

- Income Return (%) 3.17 3.45 1.63 0

30 September 2017 30 September 2016

Management Expense Ratio (MER) (%)

1.23 0.70 1.06 0.63

30 September 2017 30 September 2016

Portfolio Turnover Ratio (PTR) (times)

0.22 0.88

Distribution Record Date

30-Jun-17 31-Mar-17 30-Dec-16 30-Sep-16 30-Jun-16 31-Mar-16

Gross / Net Distribution per Unit (RM) - Class A

0.008 0.008 0.008 0.008 0.010 0.006

Gross / Net Distribution per Unit (RM) - Class I

- - 0.035 - - -

Cum-date 30-Jun-17 31-Mar-17 30-Dec-16 30-Sep-16 30-Jun-16 31-Mar-16

Cum-NAV (RM) -Class A

1.0287 1.0258 1.0185 1.0291 1.0213 1.0168

Cum-NAV (RM) -Class I

- - 1.0487 - - -

Ex-date 3-Jul-17 3-Apr-17 3-Jan-17 4-Oct-16 1-Jul-16 1-Apr-16

Ex-NAV (RM) -Class A

1.0207 1.0182 1.0109 1.0215 1.0121 1.0111

Ex-NAV (RM) -Class I - - 1.0142 - - -


FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2017


FINANCIAL STATEMENTS


CONTENTS PAGE(S)

STATEMENT BY MANAGER 1

TRUSTEE’S REPORT 2

SHARIAH ADVISER'S REPORT 3

INDEPENDENT AUDITORS' REPORT 4-7

STATEMENT OF FINANCIAL POSITION 8

STATEMENT OF COMPREHENSIVE INCOME 9

STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO UNIT HOLDERS 10

STATEMENT OF CASH FLOWS 11

NOTES TO THE FINANCIAL STATEMENTS 12-36

STATEMENT BY THE MANAGER

TO THE UNIT HOLDERS OF FRANKLIN MALAYSIA SUKUK FUND

(a)

(b)

For and on behalf of the Manager

Franklin Templeton GSC Asset Management Sdn. Bhd.

Nor Hanifah Binti Hashim

Director

Kuala Lumpur

21 November 2017

are drawn up in accordance with the provisions of the Deed, Malaysian Financial Reporting Standards

(“MFRS”) and the International Financial Reporting Standards (“IFRS”); and

give a true and fair view of the financial position of the Fund as at 30 September 2017 and of its financial

performance, changes in net assets attributable to unit holders and cash flows for the financial year then

ended.

I, Nor Hanifah Binti Hashim, being the Director of the Manager, Franklin Templeton GSC Asset Management

Sdn. Bhd., for Franklin Malaysia Sukuk Fund (“the Fund”) do hereby state that, in the opinion of the

Manager, the accompanying financial statements comprising the statement of financial position as at 30

September 2017 of the Fund, and the statements of comprehensive income, changes in net assets attributable to

unit holders and cash flows for the financial year then ended, and a summary of significant accounting policies

and other explanatory notes:

1

TRUSTEE’S REPORT


(a)

(b)

(c)

For Deutsche Trustees Malaysia Berhad

Soon Lai Ching Richard Lim Hock Seng

Senior Manager, Trustee Operations Chief Executive Officer

Kuala Lumpur

21 November 2017

We are of the view that the distributions made during this financial year ended 30 September 2017 by the

Manager are not inconsistent with the objectives of the Fund.

limitations imposed on the investment powers of the Manager and the Trustee 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 has been carried out in accordance with the Deed(s) of the Fund and

applicable regulatory requirements; and

creation and cancellation of units for the Fund have been carried out in accordance with the Deed(s) of the

Fund and applicable regulatory requirements.

We have acted as Trustee for Franklin Malaysia Sukuk Fund (the “Fund”) for the financial year ended 30

September 2017. To the best of our knowledge, for the financial year under review, Franklin Templeton GSC

Asset Management Sdn. Bhd. (the “Manager”) has operated and managed the Fund in accordance with the

following:

2

SHARIAH ADVISER’S REPORT


For and on behalf of Shariah Adviser

AMANIE ADVISORS SDN BHD

Datuk Dr Mohd Daud Bakar

Executive Chairman

Kuala Lumpur

21 November 2017

In addition, we also confirm that the investment portfolio of Franklin Malaysia Sukuk Fund comprises

securities which have been classified as Shariah-compliant by the Shariah Advisory Council of the Securities

Commission Malaysia (“SACSC”). For investment other than the abovementioned, we have reviewed the same

and are of the opinion that these investments comply with the Shariah Investment Guidelines of the Fund.

In our opinion, Franklin Templeton GSC Asset Management Sdn. Bhd. has managed and administered

Franklin Malaysia Sukuk Fund in accordance with the Shariah Investment Guidelines of the Fund and complied

with applicable guidelines, rulings or decisions issued by the Securities Commission Malaysia pertaining to

Shariah matters for the financial year ended 30 September 2017.

We have acted as the Shariah Adviser of Franklin Malaysia Sukuk Fund for the financial year ended 30

September 2017.

3

INDEPENDENT AUDITORS’ REPORT TO THE UNIT HOLDERS OF FRANKLIN MALAYSIA SUKUK FUND

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Our opinion

What we have audited

Basis for opinion

Independence and other ethical responsibilities

PricewaterhouseCoopers (AF 1146), Chartered Accountants,

Level 10, 1 Sentral, Jalan Rakyat, Kuala Lumpur Sentral, P.O. Box 10192, 50706 Kuala Lumpur, Malaysia

T: +60 (3) 2173 1188, F: +60 (3) 2173 1288, www.pwc.com/my

In our opinion, the financial statements of Franklin Malaysia Sukuk Fund (the “Fund”) give a true and fair

view of the financial position of the Fund as at 30 September 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 have audited the financial statements of the Fund, which comprise the statement of financial position as at

30 September 2017, and the statement of comprehensive income, statement of changes in net asset

attributable to unit holders 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 8 to 36.

We conducted our audit in accordance with approved standards on auditing in Malaysia and International

Standards on Auditing. Our responsibilities under those standards are further described in the “Auditors’

responsibilities for the audit of the financial statements” section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our

opinion.

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.

4

INDEPENDENT AUDITORS’ REPORT TO THE UNIT HOLDERS OF FRANKLIN MALAYSIA SUKUK FUND (CONTINUED)

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED)

Information other than the financial statements and auditors’ report thereon

Responsibilities of the Manager for 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 intend to liquidate the Fund or to cease operations, or

have no realistic alternative but to do so.

The Manager of the Fund is responsible for the other information. The other information comprises Manager’s

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.

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 of the Fund 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 Standard. 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.

5



Auditors’ responsibilities for the audit of the financial statements

(a)

(b)

(c)

(d)

(e) Evaluate the overall presentation, structure and content of the financial statements of the Fund, including

the disclosures, and whether the financial statements represent the underlying transactions and events in

a manner that achieves fair presentation.

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 with approved standards on auditing in Malaysia and International Standards on

Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error

and are considered material if, individually or in the aggregate, they could reasonably be expected to influence

the economic decisions of users taken on the basis of these financial statements.

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

Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout

the audit. We also:

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

6



Auditors’ responsibilities for the audit of the financial statements (continued)

OTHER MATTERS

PRICEWATERHOUSECOOPERS

(No. AF: 1146)

Chartered Accountants

Kuala Lumpur21 November 2017

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.

This report is made solely to the unit holders of the Fund and for no other purpose. We do not assume

responsibility to any other person for the content of this report.

7


STATEMENT OF FINANCIAL POSITION

AS AT 30 SEPTEMBER 2017

2017 2016

Note RM RM

ASSETS

Cash and cash equivalents 3 1,628,155 748,679

Financial assets at fair value through

profit or loss 4 21,615,548 21,784,562

Due from Manager - 1,000

TOTAL ASSETS 23,243,703 22,534,241

LIABILITIES

Accrued management fee 5 18,703 18,060

Accrued trustee fee 5 1,568 1,564

Other payables and accruals 21,432 24,007

TOTAL LIABILITIES (EXCLUDING NET

ASSETS ATTRIBUTABLE TO UNIT

HOLDERS) 41,703 43,631

NET ASSETS ATTRIBUTABLE TO UNIT

HOLDERS 23,202,000 22,490,610

REPRESENTED BY:


HOLDERS

– CLASS A 22,111,234 21,440,668

– CLASS I 1,090,766 1,049,942

23,202,000 22,490,610

NUMBER OF UNITS IN CIRCULATION

– CLASS A 6(a) 21,453,105.42 20,834,367.92

– CLASS I 6(b) 1,034,509.96 1,000,000.00

NET ASSET VALUE PER UNIT

– CLASS A RM1.0307 RM1.0291

– CLASS I RM1.0544 RM1.0499

The accompanying notes form an integral part of these audited financial statements.

8


STATEMENT OF COMPREHENSIVE INCOME


18 Nov 2015

1 Oct 2016 (Date of

to Launch) to

30 Sep 2017 30 Sep 2016

Note RM RM

INVESTMENT INCOME

Profit income 4 1,105,691 800,938

Net (loss)/gain from financial assets at fair value

through profit or loss 4 (75,276) 403,556

1,030,415 1,204,494

EXPENSES

Management fee 5 223,712 174,164

Trustee fee 5 19,082 15,483

Audit fee 8,925 8,904

Professional fee 2,340 7,897

Custodian fee 398 342

Shariah adviser fee 19,133 15,516

Printing fee 18 6,000

273,608 228,306

NET INCOME BEFORE

FINANCE COST AND TAXATION 756,807 976,188

Finance cost 7 (710,016) (327,048)

NET INCOME BEFORE TAXATION 46,791 649,140

Taxation 8 - -

INCREASE IN NET ASSETS

ATTRIBUTABLE TO UNIT HOLDERS 46,791 649,140

Net income after taxation and total comprehensive

income comprises the following:

Realised amount 203,552 288,046

Unrealised amount (156,761) 361,094

46,791 649,140


9


STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO UNIT HOLDERS


18 Nov 2015

1 Oct 2016 (Date of

to Launch) to

30 Sep 2017 30 Sep 2016

RM RM


HOLDERS AT THE BEGINNING OF THE

FINANCIAL YEAR/PERIOD 22,490,610 -

Movement due to units created and cancelled during

the financial year/period:

Creation of units 111,804 21,575,667

Cancellation of units (157,221) (61,245)

Reinvestment of distributions 710,016 327,048

664,599 21,841,470

Increase in net assets attributable to unit

holders during the financial year/period 46,791 649,140


HOLDERS AT THE END OF THE

FINANCIAL YEAR/PERIOD 23,202,000 22,490,610


10


STATEMENT OF CASH FLOWS


18 Nov 2015

1 Oct 2016 (Date of

to Launch) to

30 Sep 2017 30 Sep 2016

Note RM RM

CASH FLOWS FROM OPERATING

ACTIVITIES

Proceeds from sales of investments 5,083,700 8,534,340

Purchase of investments (5,001,450) (29,590,850)

Profit income received 1,117,179 476,442

Management fee paid (223,069) (156,104)

Trustee fee paid (19,078) (13,919)

Audit fee paid (8,925) -

Profesional fee paid (4,672) -

Custodian fee paid (398) (342)

Shariah adviser fee paid (19,080) (14,310)

Payment of other expenses (314) -

Net cash generated from/(used in) operating activities 923,893 (20,764,743)

CASH FLOWS FROM FINANCING

ACTIVITIES

Proceeds from creation of units 112,804 21,574,667

Payments for cancellation of units (157,221) (61,245)

Net cash (used in)/generated from financing activities (44,417) 21,513,422

NET INCREASE IN CASH AND CASH EQUIVALENTS 879,476 748,679

CASH AND CASH EQUIVALENTS AT

BEGINNING OF THE FINANCIAL YEAR/PERIOD 748,679 -

CASH AND CASH EQUIVALENTS AT

END OF THE FINANCIAL YEAR/PERIOD 3 1,628,155 748,679


11


NOTES TO THE FINANCIAL STATEMENTS


1. THE FUND, THE MANAGER AND ITS PRINCIPAL ACTIVITIES

The financial statements have been approved for issue by the Manager on 21 November 2017.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation

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

Financial Reporting Standards (“MFRS”) and International Financial Reporting Standards (“IFRS”).

The financial statements have been prepared under the historical cost convention, as modified by

revaluation of financial assets and liabilities (including derivative instruments) held at fair value

through profit or loss.

The preparation of financial statements in conformity with MFRS and IFRS requires the use of

certain critical accounting estimates and assumptions that affect the reported amounts of assets and

liabilities and disclosure of contingent assets and liabilities at the date of the financial statements,

and the reported amounts of revenues and expenses during the reported financial year.

It also requires the Manager to exercise their judgment in the process of applying the Fund’s

accounting policies. Although these estimates and assumptions are based on the Manager’s best

knowledge of current events and actions, actual results may differ.

The areas involving a higher degree of judgment or complexity, or areas where assumptions and

estimates are significant to the financial statements are disclosed in Note 2.13.

The Franklin Malaysia Sukuk Fund (the “Fund”) was constituted pursuant to a Deed dated 13 February

2015, between Franklin Templeton GSC Asset Management Sdn. Bhd. (the “Manager”) and Deutsche

Trustees Malaysia Berhad (the “Trustee”).

All investments will be subjected to the Securities Commission (“SC”) Guidelines on Unit Trust Funds, the

Deed and the objective of the Fund. The Fund commenced operations on 9 December 2015 and will

continue its operations until terminated as provided under Clause 12 of the Deed.

The Manager, a company incorporated in Malaysia, is a wholly owned subsidiary of Franklin Resources Inc.,

a global investment management organisation. Its principal activities are fund management and investment

advisory.

The principal accounting policies applied in the preparation of these financial statements are set out below.

These policies have been consistently applied to the items which are considered material to the financial

statements unless otherwise stated.

The principal objective of the Fund seeks to maximise total investment return consisting of profit income

and capital gains in the long term through investments primarily in Ringgit Malaysia-denominated sukuk.

The Fund is a multi-class Fund which offers two classes of units. They are class A, targeted at retail investors

and Class I, targeted at institutional investors. Both are denominated in Ringgit Malaysia.

12



FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2017 (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.1 Basis of preparation (continued)

(a)

(b)

(i) Financial year beginning on/after 1 October 2017

Standards, amendments to published standards and interpretations that are

effective and applicable to the Fund:

The new standards, amendments to published standards and interpretations to

existing standards that are applicable to the Fund but not yet effective and have

not been early adopted are as follows:

Amendments to MFRS 107 “Statement of Cash Flows - Disclosure Initiative” (effective

from 1 January 2017) introduce an additional disclosure on changes in liabilities arising

from financing activities.

The Fund will apply this standard when effective. This standard is not expected to have a

significant impact on the Fund’s financial statements.

The Fund has applied the following amendments for the first time for the financial year

beginning 1 October 2016:

Amendments to MFRS 101 “Presentation of financial statements - Disclosure Initiative”

(effective from 1 January 2016) provide clarifications on a number of issues, including:

Materiality - an entity should not aggregate or disaggregate information in a manner

that obscures useful information. Where items are material, sufficient information must

be provided to explain the impact on the financial position or performance.

Disaggregation and subtotals – line items specified in MFRS 101 may need to be

disaggregated where this is relevant to an understanding of the entity’s financial

position or performance. There is also new guidance on the use of subtotals.

Notes - confirmation that the notes do not need to be presented in a particular order.

Other comprehensive income (“OCI”) arising from investments accounted for under the

equity method – the share of OCI arising from equity-accounted investments is grouped

based on whether the items will or will not subsequently be reclassified to profit or loss.

Each group should then be presented as a single line item in the statement of other

comprehensive income.

According to the transitional provisions, the disclosures in MFRS 108 regarding the

adoption of new standards/accounting policies are not required for these amendments.

Annual Improvements to MFRSs 2012 – 2014 Cycle

The adoption of these amendments did not have any impact on the current financial year or

any prior year and is not likely to affect future years.

13





2.1 Basis of preparation (continued)

(b)

(ii) Financial year beginning on/after 1 October 2018

___________________________

[2] For the purposes of the investments made by the Fund, debt instruments refers to Sukuk.

[3] For the purposes of this Fund, profit refers to profits earned from Shariah-compliant investments.

The new standards, amendments to published standards and interpretations to

existing standards that are applicable to the Fund but not yet effective and have

not been early adopted are as follows (continued):

A debt instrument[2]

is measured at amortised cost only if the entity is holding it to

collect contractual cash flows and the cash flows represent principal and profit[3]

.

MFRS 9 “Financial Instruments” (effective from 1 January 2018) will replace MFRS 139

“Financial Instruments: Recognition and Measurement”.

MFRS 9 retains but simplifies the mixed measurement model in MFRS 139 and

establishes three primary measurement categories for financial assets: amortised cost,

fair value through profit or loss and fair value through OCI. The basis of classification

depends on the entity's business model and the contractual cash flow characteristics of

the financial asset. Investments in equity instruments[1]

are always measured at fair

value through profit or loss with an irrevocable option at inception to present changes

in fair value in OCI (provided the instrument is not held for trading).

For liabilities, the standard retains most of the MFRS 139 requirements. These include

amortised cost accounting for most financial liabilities, with bifurcation of embedded

derivatives. The main change is that, in cases where the fair value option is taken for

financial liabilities, the part of a fair value change due to an entity’s own credit risk is

recorded in OCI rather than the income statement, unless this creates an accounting

mismatch.

MFRS 9 introduces an expected credit loss model on impairment that replaces the

incurred loss impairment model used in MFRS 139. The expected credit loss model is

forward-looking and eliminates the need for a trigger event to have occurred before

credit losses are recognised.

The Fund will apply this standard when effective. This standard is not expected to have a

significant impact on the Fund’s financial statements.

[1]For the purposes of the investments made by the Fund, equity instruments and derivatives refers to Shariah-

compliant equity instruments and Shariah-compliant derivatives.

14





2.2 Financial assets and financial liabilities

2.2.1 Classification

(a) Financial assets and liabilities at fair value through profit or loss

(b) Financing and receivables

(c) Other financial liabilities

2.2.2 Recognition, de-recognition and measurement

Financing and receivables are non-derivative financial assets with fixed or determinable

payments that are not quoted in an active market. If collection amount is expected in one year

or less, they are classified as current assets. If not, they are classified as non-current assets.

The Fund’s financing and receivables comprise “Cash and cash equivalents” and “Due from

Manager” in the statement of financial position.

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

entered into and the definitions of a financial liability. The Fund classifies “Due to Manager”,

“Accrued management fee”, “Accrued trustee fee” and “Other payables and accruals” as other

financial liabilities.

Financial assets are derecognised when the rights to receive cash flows from the investments have

expired or have been transferred and the Fund has transferred substantially all risks and rewards of

ownership.

Financial liabilities are derecognised when it is extinguished, i.e. when the obligation specified in

the contract is discharged or cancelled or expired.

Regular purchases and sales of financial assets are recognised on the trade-date, the date on which

the Fund commits to purchase or sell the investment. Financial assets and financial liabilities at fair

value through profit or loss are initially recognised at fair value and transaction costs are expensed

in the statement of comprehensive income.

Subsequent to initial recognition, all financial assets at fair value through profit or loss are measured

at fair value. Financing and receivables are carried at amortised cost using the effective profit

method. Gains or losses arising from changes in the “fair value of the financial assets at fair value

through profit or loss” category are presented in the statement of comprehensive income within “net

gain/loss on financial assets at fair value through profit or loss” in the period in which they arise.

Unquoted Sukuk are revalued on a daily basis based on fair value prices quoted by a Bond Pricing

Agency ("BPA") registered with SC as per the SC Guidelines on Unit Trust Funds.

A financial asset is designated at fair value through profit or loss when they are managed and

their performance evaluated on their fair value basis. The fund designates its investment in

unquoted Sukuk as financial assets at fair value through profit or loss at inception. A financial

asset is designated at fair value through profit or loss when they are managed and their

performance evaluated on a fair value basis. A financial asset is classified as held for trading if

it is acquired or incurred principally for the purpose of selling or repurchasing in the near

terms or if on initial recognition is part of a portfolio of identifiable financial investments that

are managed together and for which there is evidence of a recent actual pattern of short-term

profit taking, or if it is a derivative. Investment in derivatives are categorised as held for

trading.

15





2.2.2 Recognition, de-recognition and measurement (continued)

2.3 Income and expenses recognition

(a) Profit income

(b) Realised gain or loss on sale

(c) Expenses

Expenses are recognised in the statement of comprehensive income on an accrual basis.

2.4 Foreign currencies translation

(a) Functional and presentation currency

(b) Transactions and balances

2.5 Creation and cancellation of units

Shariah-compliant deposits with licensed Islamic financial institutions are stated at cost plus

accrued profit calculated on the effective profit method over the period from the date of placement

to the date of maturity of the respective deposits.

Foreign currency transactions are translated into the functional currency using exchange rates

prevailing at the dates of the transactions or valuation where items are remeasured. Foreign

exchange gains and losses resulting from the settlement of such transactions and from the

translation at period-end exchange rates of monetary assets and liabilities denominated in

foreign currencies are recognised in statement of comprehensive income.

The Fund assesses at each year end date whether there is objective evidence that a financial asset or

a group of financial assets is impaired. Impairment loss, if any, will be recognised in the statement

of comprehensive income in the year which the arise.

Profit income from Shariah-compliant deposits with licensed Islamic financial institutions

and unquoted Sukuk are recognised in the statement of comprehensive income on a time-

proportion basis using the effective profit rate method on an accrual basis.

Realised gain or loss on sale of unquoted Sukuk is accounted for as the difference between the

net disposal proceeds and the carrying amount of investments, determined on cost adjusted

for accretion of discount or amortisation of premium.

Items included in the financial statements of the Fund are measured using the currency of the

primary economic environment in which the Fund operates (the “functional currency”). The

financial statements are presented in Ringgit Malaysia (“RM”), which is the Fund’s functional

and presentation currency.

The Fund issued cancellable units, in two different classes of units, known respectively as the A class

and I class which are cancellable at the unit holder’s option and do not have identical features. In

accordance with MFRS 132 (Amendment) “Financial Instruments: Presentation", such units, by

virtue of not having identical features, are classified as financial liabilities. The cancellable units can

be put back to the Fund at any time for cash equal to a proportionate share of the Fund’s net asset

value (“NAV”) attributable to the respective classes. The outstanding units are carried at the

redemption amount that is payable at the statement of financial position if the unit holder exercises

the right to put back the unit to the Fund.

16





2.5 Creation and cancellation of units (continued)

2.6 Due from and due to Manager

2.7 Cash and cash equivalents

2.8 Other payables and accruals

Taxation

Increase/decrease in net assets attributable to unit holders

“Due from Manager” is recognised initially at fair value and subsequently measured at amortised

cost using the effective profit method, less an allowance for doubtful debts. The allowance is

established when there is objective evidence that the Fund will not be able to collect all amounts due

according to the original terms of receivables. Bad debts are written off when identified.

For the purpose of the statement of cash flow, cash equivalents are held for the purpose of meeting

short term cash commitment rather than for investment or other purposes. Cash and cash

equivalents comprise Shariah-compliant bank balances and deposits with licensed Islamic financial

institutions, other short term, highly liquid investments with original maturities of 3 months or less

that are readily convertible to known amounts of cash and which are subject to an insignificant risk

changes in value.

Units are created and cancelled at the unit holder’s option at prices based on the Fund’s NAV per

unit of respective classes at the close of business on the relevant dealing day. The Fund’s NAV per

unit of respective classes is calculated by dividing the net assets attributable to unit holders of

respective classes with the total number of outstanding units of respective classes.

“Due to Manager” is recognised initially at fair value and subsequently measured at amortised cost

using the effective profit method.

“Due from Manager” and “Due to Manager” represents receivable from and payable to the Manager

for units created and cancelled.

2.9

Current tax expense is determined according to Malaysian tax laws at the current rate based upon

the taxable profit earned during the financial year/period.

2.10

Income not distributed is included in net assets attributable to unit holders. Movements in net

assets attributable to unit holders are recognised in the statement of comprehensive income as

finance costs.

Other payables and accruals are obligations to pay for expenses incurred by the Fund. Other

payables and accruals are classified as current liabilities as payment is due within the normal

operating cycle of the Fund.

Other payables and accruals are recognised initially at fair value and subsequently measured at

amortised cost using the effective profit method.

17





Finance cost

Segmental information

Critical accounting estimates and judgments in applying accounting policies

3. CASH AND CASH EQUIVALENTS

2017 2016

RM RM

Islamic deposits with licensed Islamic financial institutions 1,562,265 717,286

Bank balance in a licensed financial institution 65,890 31,393

1,628,155 748,679

2.12

Operating segments are reported in a manner consistent with the internal reporting used by the

chief operating decision-maker. The chief operating decision-maker, is responsible for allocating

resources, assessing performance of the operating segments, and undertaking strategic decisions for

the Fund.

2.11

The Fund makes estimates and assumptions concerning the future. The resulting accounting

estimates will, by definition, rarely equal the related actual results. To enhance the information

content of the estimates, certain key variables that are anticipated to have material impact to the

Fund’s results and financial position are tested for sensitivity to changes in the underlying

parameters.

Estimates and judgment are continually evaluated by the Manager and are based on historical

experience and other factors, including expectations of future events that are believed to be

reasonable under the circumstances.

Ringgit Malaysia-denominated unquoted Sukuk are valued using fair value prices quoted by BPA.

Investment in foreign unquoted Sukuk will be valued by using Reuters. Where BPA and Reuters

price are not available, these Sukuk will be valued by reference to the average indicative yield quoted

by three independent and reputable institutions provider by the Manager. Where the price quoted

by BPA for a specific Sukuk differs from the market price by more than 20 basis points, the Manager

may use market price.

A distribution to the Fund’s unit holders is recognised as a deduction from realised profit when they

are appropriately approved by the Board of Directors of the Manager. A proposed distribution is

recognised as a finance cost in the period in which it is approved by the Trustee.

In undertaking any of the Fund’s investment, the Manager will ensure that all assets of the Fund

under management will be valued appropriately, that is at fair value and in compliance with the SC

Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework.

2.13

18




4. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

2017 2016

RM RM

4.1 Designated at fair value through profit or loss

at inception:- Unquoted Sukuk 21,615,548 21,784,562

18 Nov 2015

(Date of

1 Oct 2016 to Launch) to

30 Sep 2017 30 Sep 2016

RM RM

Net (loss)/gain on financial assets at fair value through

profit or loss:

- Realised gain on disposals 81,485 42,462

- Unrealised (loss)/gain on changes in fair values (156,761) 361,094

(75,276) 403,556

4.2 Profit Income

2017 2016

RM RM

Profit income from unquoted Sukuk 1,068,841 693,373

Profit income from Islamic money market instruments 36,850 107,565 1,105,691 800,938

5. TRANSACTIONS AND BALANCES WITH RELATED PARTIES

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

Related parties Relationship

Franklin Templeton GSC Asset

Management Sdn. Bhd. The Manager

Templeton Global Advisors Limited Affiliated company of the Manager

Deutsche Trustees (Malaysia) Berhad The Trustee

Deutsche Bank (Malaysia) Berhad Associate company of the Trustee

Other than disclosed elsewhere in the financial statements, the following related party transactions took

place during the financial year. The Manager is of the opinion that all transactions with the related company

have been entered into in the normal course of business at agreed terms between the related parties.

The detailed portfolio of investment is disclosed in note 15 to the financial statements.

19




5. TRANSACTIONS AND BALANCES WITH RELATED PARTIES (CONTINUED)

5.1 Units held by the Manager and parties related to Manager

No. of No. of

units RM units RM

Affiliated company of the

Manager

- Templeton Global

Advisors Limited

- Class A 21,346,408.20 22,001,743 20,688,257.92 21,290,286 - Class I 1,034,509.96 1,090,766 1,000,000.00 1,049,900

The above units are legally held and were transacted at the prevailing market price.

5.2 Fees and charges

18 Nov 2015

(Date of


30 Sep 2017 30 Sep 2016 2017 2016

RM RM RM RM

(a) Management fee 223,712 174,164 18,703 18,060

(b) Trustee fee 19,082 15,483 1,568 1,564

Total 242,794 189,647 20,271 19,624

(a) Management fee

Class A

Class I

Expense Accrual

For the financial year/period ended 30 September 2017 and 30 September 2016, the Manager is

entitled to receive a fee of 0.45% per annum of the NAV of the Fund attributable to this class of units.

20162017

In accordance with Clause 13.1 of the Deed, management fee can be charged at a maximum of 3.00%

per annum, calculated based on the net asset value of the Fund.

For the financial year/period ended 30 September 2017 and 30 September 2016, the Manager is

entitled to receive a fee of 0.95% per annum of the NAV of the Fund attributable to this class of units.

Other than the above, there were no units held by directors or parties related to the Manager.

20




5. TRANSACTIONS AND BALANCES WITH RELATED PARTIES (CONTINUED)

5.2 Fees and charges (continued)

(b) Trustee fee

6. NUMBER OF UNITS IN CIRCULATION

(a) CLASS A

2017 2016

No. of units No. of units

Beginning balance 20,834,367.92 -

Creation of units 109,655.05 20,571,135.42

Cancellation of units (154,122.51) (60,025.42)

Reinvestment of distributions 663,204.96 323,257.92

Closing balance 21,453,105.42 20,834,367.92

(b) CLASS I

2017 2016

No. of units No. of units

Beginning balance 1,000,000.00 -

Creation of units - -

Reinvestment of distributions 34,509.96 1,000,000.00

Closing balance 1,034,509.96 1,000,000.00

7. FINANCE COST

18 Nov 2015

(Date of


30 Sep 2017 30 Sep 2016

RM RM

Distribution to unit holders is derived

from the following sources:

Profit income from Shariah-compliant deposits with

licensed Islamic financial institutions 36,850 107,565

Profit income from unquoted Sukuk 879,070 419,663

67,704 28,126

983,624 555,354

Less: Expenses (273,608) (228,306)

Net distribution amount 710,016 327,048

Net realised gain on sale of investment

In accordance with Clause 13.2 of the Deed, trustee fee can be charged at a maximum of 0.20%

per annum, calculated based on the net asset value of the Fund, subject to a minimum fee of

RM18,000 per annum (excluding foreign custodian fees and charges).

For the financial year/period ended 30 September 2017 and 30 September 2016, the Trustee is

entitled to receive a fee of 0.06% per annum of the net asset value of the Fund, subject to a

minimum fee of RM18,000 per annum.

21




7. FINANCE COST (CONTINUED)

2017 2016

Gross/Net distribution per unit (RM) - Class A

March 0.008 0.006

June 0.008 0.010

September - 0.008December - 0.008

Gross/Net distribution per unit (RM) - Class IDecember - 0.035

Distribution is based on cumulative net income since inception.

8. TAXATION

18 Nov 2015

(Date of


30 Sep 2017 30 Sep 2016

RM RM

Current taxation - -

18 Nov 2015

(Date of


30 Sep 2017 30 Sep 2016

RM RM

Income before taxation 46,791 649,140

Taxation at Malaysian statutory rate of 24% (2016: 24%) 11,230 155,794

Tax effects of:

Investment income not subject to tax (247,300) (289,079)

Restriction on tax deductible expenses 55,837 45,376

Expenses not deductible for tax purposes 180,233 87,909

Taxation - -

The numerical reconciliation between net income before taxation multiplied by the Malaysian statutory tax

rate and tax expense of the Fund is as follows:

Gross distribution is derived using total income less total expenses. Gross distribution per unit is derived

from gross realised income less expenses, divided by the number of units in circulation. Net distribution

per unit is derived from gross realised income less expenses and taxation, divided by the number of units in

circulation.

During the financial year ended 30 September 2017, the Fund incurred unrealised losses on changes in fair

values of RM156,761. For the prior period, there is unrealised gain of RM361,094.

22




9. TRANSACTIONS WITH BROKERS / DEALERS

Percentage Percentage

Value of of total of total

trades trades Brokerage brokerage

2017 RM % RM %

Maybank Islamic

Berhad 29,523,000 74.04 - -

RHB Investment Bank - -

Berhad 3,029,388 7.60 - -

CIMB Islamic Bank - -

Berhad 4,764,000 11.95 - -

Bank Islam Malaysia

Berhad 2,059,060 5.16 - -

Standard Chartered bank

Malaysia Berhad 500,000 1.25 - -

Total 39,875,448 100.00 - -

Percentage Percentage

Value of of total of total

trades trades Brokerage brokerage

2016 RM % RM %

CIMB Islamic Bank

Berhad 66,491,000 38.50 - -

Maybank Islamic Berhad 37,192,000 21.54 - -

RHB Islamic Bank Berhad 30,530,000 17.68 - -

Bank Islam Malaysia

Berhad 14,476,031 8.38 - -

Hong Leong Bank Berhad 10,194,879 5.90 - -

AmBank (M) Berhad 7,783,041 4.51 - -

RHB Investment Bank

Berhad 2,521,497 1.46 - -

RHB Bank Berhad 2,000,000 1.16 - -

JP Morgan Chase Bank

Berhad 1,495,522 0.87 - -

Total 172,683,970 100.00 - -

Details of transactions with the top 10 brokers / dealers for the financial period from 18 November 2015

(date of launch) to 30 September 2016 are as follows:

Details of transactions with the top 10 brokers / dealers for the financial year ended 30 September 2017 are

as follows:

23




10. MANAGEMENT EXPENSE RATIO (“MER”)

18 Nov 2015

(Date of


30 Sep 2017 30 Sep 2016 % %

MER

– CLASS A 1.23 1.06 – CLASS I 0.70 0.63

MER is derived based on the following calculation:

MER= (A + B + C + D + E + F + G) x 100

H

A = Management fee

B = Trustee fee

C = Audit fee

D = Professional fee

E = Custodian fee

F = Printing fee

G = Shariah adviser fee

H = Average daily net asset value of the share class

11. PORTFOLIO TURNOVER RATIO (“PTR”)

18 Nov 2015

(Date of


30 Sep 2017 30 Sep 2016

PTR (times) 0.22 0.88

Total acquisition for the financial year/period amounted to RM5,001,450 (2016: RM29,835,333).

Total disposal for the financial year/period amounted to RM5,083,700 (2016: RM8,635,638).

Average daily net asset value is RM22,775,231 (2016: RM21,851,054).

12. FINANCIAL RISK MANAGEMENT

The average daily net asset value of Class A and I for the financial year/period is RM21,709,557 (2016:

RM20,827,243) and RM1,065,674 (2016: RM1,023,811) respectively.

PTR represents the average of total acquisitions and disposals of investments in the Fund for the financial

year/period over the Fund’s average daily net asset value where:

The Fund seeks to maximise total investment return consisting of profit income and capital gains in the

long term through investments primarily in RM-denominated Sukuk.

The Fund is involved in investment trading and its activities expose it to a variety of financial risks: market

risk (including market price risk and interest rate risk), credit and counterparty risk and liquidity risk.

24




12. FINANCIAL RISK MANAGEMENT (CONTINUED)

12.1 Market risk

(a) Market price risk

(b) Value-at-risk (“VaR”)

The VaR is calculated using the Monte Carlo simulation. This approach estimates VaR by

generating risk factor scenarios and revaluing portfolio positions using a fundamental risk factor

model built up by identifying variables that can impact a security’s price and measuring

correlations those factors have to each other (derived by applying statistical analysis to historical

data). The approach applies random shocks to the factors expected to impact volatility, reprices

the portfolio at a point in time, repeats the process thousands of times, and creates a distribution

of returns from all the values. The VaR at a 99% confidence level represents the best possible

outcome for the worst 1% of returns from the resulting distribution. Both the size and probability

of actual portfolio losses can differ significantly from the losses predicted by VaR. In addition,

the use of historical data to derive correlations may not encompass all potential events,

particularly events which may be extreme in nature. As a result, VaR maybe under or

overestimated due to the assumptions placed on the risk factors and the relationship between

such factors.

VaR is used to monitor the market price risk exposure. VaR is a measure of the maximum

potential loss at a given confidence level over a specific time period under normal market

conditions. The VaR presented is calculated assuming a one-month (20-day) holding period at a

99% confidence level, expressed in percentage of negative return.

The Fund uses different methods to measure and manage the various types of risk to which it is

exposed. These methods are explained below.

The overall responsibility for the implementation of the Fund’s financial risk management policies lies with

the Investment Manager, who, among other things, focuses on the unpredictability of financial markets and

seeks to minimise potential adverse effects on the financial performance of the Fund. Information about

these risk exposures at the reporting date and risk management policies employed are disclosed in notes

12.1 to 12.5.

Market risk arises because of factors that affect the market overall, and particularly the market

where the Fund will be focusing its investments. Factors such as economic growth, financial

market conditions, political stability and the social environment are some examples of conditions

that have an impact on businesses, which in turn may impact the market value of the investment

of the Fund positively or negatively depending on how the market values of the underlying

investments held in the portfolio of the Fund are impacted. Investors who purchase units of the

Fund may not get back the full amount that they have invested if the NAV per Unit of the Fund

falls below the investors’ purchase price due to adverse price movements of the Fund’s

underlying investments.

The Fund is also exposed to operational risks such as custody risk. Custody risk is the risk of loss of

securities held in custody occasioned by the insolvency or negligence of the custodian. Although an

appropriate legal framework is in place that eliminates the risk of loss of value of the securities held by the

custodian, in the event of its failure, the ability of the Fund to transfer the securities might be temporarily

impaired. All securities investments present a risk of loss of capital.

25





12.1 Market risk (continued)

(b) Value-at-risk (“VaR”) (continued)

2017 2016

VaR (%) 5.50 4.05 VaR (RM amount) 1,278,404 882,275

(c) Currency risk

(d) Interest rate risk

Interest rate is a general economic indicator that will have impact on the management of the

Fund. It does not in any way suggest that this Fund will invest in conventional financial

instruments. All investments carried out for the Fund including placement and deposits are in

accordance with Shariah.

The Manager does not actively manage the foreign currency risk of non-RM denominated assets

as in their opinion the cost of such a process would result in an unacceptable reduction in the

potential for market growth.

The Fund may invest up to 20% of its net asset value in non-RM denominated Islamic

Instruments and will therefore be exposed to the exchange rate fluctuations of RM, the

functional currency, against foreign currencies.

The market risk of the Fund has been computed using a 20 day holding period at 99% confidence

level as follows:

As at 30 September 2017 and 30 September 2016, the effect of any reasonably possible

movement in interest rates would have an immaterial effect on the net assets attributable to unit

holders.

The Fund invests in sukuk and Islamic money market instruments and is exposed to risks

associated with the effects of fluctuations in the prevailing levels of market interest rates on its

financial position and cashflows. The Manager monitors the interest rate risk actively by

reviewing the profit rate duration of the portfolio in line with Fixed Income Policy Committee’s

recommendations.

The cash balance is held with Deutsche Bank (Malaysia) Berhad. Islamic money market

instruments are placed with licensed Islamic institutions.

26






(d) Interest rate risk (continued)

Less than 1 month - 1 - 5 Non-profit

1 Month 1 year years > 5 years bearing Total

RM RM RM RM RM RM

2017

Assets

Cash and cash

equivalents 1,628,155 - - - - 1,628,155

Financial assets

at fair value

through

profit or loss - - 17,762,162 3,853,386 - 21,615,548

Total assets 1,628,155 - 17,762,162 3,853,386 - 23,243,703

Liabilities

Accrued

management

fee - - - - 18,703 18,703

Accrued trustee

fee - - - - 1,568 1,568

Other payables

and

accruals - - - - 21,432 21,432

Net assets

attributable

to unit

holders - - - - 23,202,000 23,202,000

- - - - 23,243,703 23,243,703

Total interest

sensitivity

gap 1,628,155 - 17,762,162 3,853,386

27






(d) Interest rate risk (continued)

Less than 1 month - 1 - 5 Non-profit

1 Month 1 year years > 5 years bearing Total

RM RM RM RM RM RM

2016

Assets

Cash and cash

equivalents 748,679 - - - - 748,679

Financial assets

at fair value

through

profit or loss - - 10,904,396 10,880,166 - 21,784,562

Due from

Manager - - - - 1,000 1,000

Total assets 748,679 - 10,904,396 10,880,166 1,000 22,534,241

Liabilities

Accrued

management

fee - - - - 18,060 18,060

Accrued trustee

fee - - - - 1,564 1,564

Other payables

and

accruals - - - - 24,007 24,007

Net assets

attributable

to unit

holders - - - - 22,490,610 22,490,610

- - - - 22,534,241 22,534,241

Total interest

sensitivity

gap 748,679 - 10,904,396 10,880,166

28





12.2 Liquidity risk

Between

No Less than 1 month

maturity 1 month to 1 year Total

2017 RM RM RM RM

Assets

Cash and cash

equivalents 1,628,155 - - 1,628,155

Financial assets at fair

value through

profit or loss - 21,615,548 - 21,615,548

Total assets 1,628,155 21,615,548 - 23,243,703

Liabilities

Accrued

management fee - 18,703 - 18,703

Accrued trustee fee - 1,568 - 1,568

Other payables and

accruals - - 21,432 21,432

Net asset attributable

to unit holders - 23,202,000 - 23,202,000

Total liabilities - 23,222,271 21,432 23,243,703

Contractual cash

in/(out) flows 1,628,155 (1,606,723) (21,432) -

The liquidity risks associated with the need to satisfy shareholders requests for redemptions are

mitigated by maintaining a constant pool of cash to satisfy usual levels of demand. The Fund’s

investments are traded in an active market and are hence considered to be readily realisable. However,

the value of the portfolio may be negatively affected if the Fund needs to meet redemptions by selling

significant portions of the assets over a short period of time in times of market uncertainty.

The table below analyses the Fund’s financial assets and liabilities into relevant maturity groupings

based on the remaining period from the statement of financial position date to the contractual maturity

date. The amounts in the table are the contractual undiscounted cash flows. Balances due within 12

months equal their carrying balances, as the impact of discounting is not significant.

29





12.2 Liquidity risk (continued)

Between

No Less than 1 month

maturity 1 month to 1 year Total

2016 RM RM RM RM

Assets

Cash and cash

equivalents 748,679 - - 748,679

Financial assets at fair

value through

profit or loss - 21,784,562 - 21,784,562

Due from Manager - 1,000 - 1,000

Total assets 748,679 21,785,562 - 22,534,241

Liabilities

Accrued

management fee - 18,060 - 18,060

Accrued trustee fee - 1,564 - 1,564

Other payables and

accruals - - 24,007 24,007

Net asset attributable

to unit holders - 22,490,610 - 22,490,610

Total liabilities - 22,510,234 24,007 22,534,241

Contractual cash

in/(out) flows 748,679 (724,672) (24,007) -

12.3 Credit risk

The credit risk is mitigated by investing in securities which at the time of the purchase have a minimum

credit rating of BBB3 by RAM Rating Services Berhad (“RAM”) or an equivalent credit rating by

Malaysia Rating Corporation Berhad (“MARC”) or any recognised credit rating agency.

The Fund may employ Shariah-compliant hedging instruments which are traded over the counter. To

mitigate credit risk inherent to those instruments the Risk committee within the Manager will exercise

due diligence controls prior the fund investing in said instruments.

30





12.3 Credit risk (continued)

Financial a

sv

a Cash and Amount

cash through due fromp

r equivalents

from

Manager Total

RM RM RM RM

AAA 1,562,265 2,033,417 - 3,595,682

AA3 - 7,156,771 - 7,156,771

AA2 - 1,552,773 - 1,552,773

AA1 65,890 1,267,429 - 1,333,319

AA (IS) - 2,569,980 - 2,569,980

A1 - 4,220,242 - 4,220,242

A3 - 1,785,323 - 1,785,323

A (IS) - 1,029,613 - 1,029,613

1,628,155 21,615,548 - 23,243,703

AAA (S) - 2,101,605 - 2,101,605

AAA 717,286 - - 717,286

AA3 - 6,656,314 - 6,656,314

AA2 - 1,061,732 - 1,061,732

AA1 31,393 1,282,971 - 1,314,364

AA (IS) - 2,589,577 - 2,589,577

A1 - 4,248,082 - 4,248,082

A3 - 1,790,118 - 1,790,118

NR - 2,054,163 1,000 2,055,163

748,679 21,784,562 1,000 22,534,241

2016

2017

The following table sets out the credit risk concentration of the Fund:

asset at fair

value

profit or loss

31





12.4 Fair value estimation

• Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);

•

•

Level 1 Level 2 Level 3 Total

RM RM RM RM

2017

Assets

Financial assets held for

trading

- Sukuk - 21,615,548 - 21,615,548

Level 1 Level 2 Level 3 Total

RM RM RM RM

2016

Assets

Financial assets held for

trading

- Sukuk - 21,784,562 - 21,784,562

The fair value of financial assets and liabilities traded in active markets (such as publicly traded trading

securities) is based on last traded prices at the close of trading on the period end date. If a significant

movement in fair value occurs subsequent to the close of trading up to midnight on the year end date,

valuation techniques will be applied to determine fair value. A financial instrument is regarded as

quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer,

broker, industry group, pricing service or regulatory agency and those prices represent actual and

regularly occurring market transactions on an arm’s length basis. The carrying value less impairment

provision of other receivables and payables are assumed to approximate their fair values. The fair value

of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash

flows at the current market interest rate that is available to the Fund for similar financial instruments.

The Company classifies fair value measurements using a fair value hierarchy that reflects the

significance of inputs used in making the measurements. The fair value hierarchy has the following

levels:

The level in the fair value hierarchy within which the fair value measurement is categorised in its

entirety is determined on the basis of the lowest level input that is significant to the fair value

measurement in its entirety. For this purpose the significance of an input is assessed against the fair

value measurement in its entirety. If a fair value measurement uses observable inputs that require

significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement.

Assessing the significance of a particular input to the fair value measurement in its entirety requires

judgement, considering factors specific to the asset or liability. The determination of what constitutes

‘observable’ requires significant judgement. The Investment Manager considers observable data to be

that market data that is readily available, regularly distributed or updated, reliable and verifiable, not

proprietary and provided by independent sources that are actively involved in the relevant market.

Inputs other than quoted prices included within level 1 that are observable for the asset or liability,

either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2);

Inputs for the asset or liability that are not based on observable market data (that is unobservable

inputs) (Level 3).

32





12.5 Capital Risk Management

13. SEGMENT INFORMATION

14. SUBSEQUENT EVENTS

15. COMPARATIVE FINANCIAL INFORMATION

The comparatives are in respect of the financial period from 18 November 2015 (date of launch) to 30

September 2016 and hence, not comparable to the current financial year’s results.

The reportable operating segment derives its income by seeking investments to achieve targeted returns

consummate with an acceptable level of risk within the portfolio. These returns consist of profit income

earned from investments and gains on the appreciation in the value of Shariah-compliant investments and

from Shariah-compliant deposits placed with licensed financial institutions.

The capital of the Fund is represented by the net assets attributable to its unit holders. These amounts

can change significantly on a daily basis as the Fund is subject to daily subscriptions and redemptions

at the discretion of unit holders. The Fund’s objectives when managing capital is to safeguard the

Fund’s ability to continue as a going concern in order to provide returns for unit holders and to

maintain a strong capital base to support the development of the investment activities of the Fund. In

order to maintain or adjust the capital structure the Fund’s policy is to redeem and issue new units in

accordance with the prospectus which includes the ability to restrict redemptions and requires certain

minimum holdings and subscriptions.

The Manager proposed for the payment of a distribution of RM0.008 per unit for Class A in respect of the

financial quarter ended 30 September 2017, with the final distributable amount determined and approved on

2 October 2017. The distribution will be recognised as finance cost in the statement of comprehensive income

for the financial year ending 30 September 2018.

The internal reporting provided to the chief operating decision-maker for the Fund’s performance is prepared

on a consistent basis with the measurement and recognition principles of MFRS and IFRS. The chief

operating decision-maker is responsible for the performance of the Fund and considers the business to have a

single operating segment located in Malaysia. Asset allocation decisions are based on a single, integrated

investment strategy and the Fund’s performance is evaluated on an overall basis.

33




15. PORTFOLIO OF INVESTMENTS

Fair value as

a percentage of

Nominal Aggregate Market net asset

value cost value value

30 Sep 2017 RM RM RM %

Name of issuer

SUKUK

AmBank Islamic Berhad 5.35%

due 21/12/2020 4,000,000 4,059,803 4,125,003 17.78

Bank Islam Malaysia Berhad

5.75 % due 22/4/2020 4,000,000 4,130,128 4,220,242 18.19

Bank Muamalat Malaysia Berhad

5.50% due 25/11/2021 1,000,000 1,019,203 1,029,613 4.44


5.80% due 15/06/2021 1,750,000 1,780,178 1,785,323 7.69

Bank Pembangunan Malaysia Berhad

4.28% due 02/03/2022 1,000,000 1,002,526 1,002,478 4.32

Digi telecommunications Sdn Bhd

4.53% due 12/04/2024 1,000,000 1,021,099 1,030,939 4.44

Gamuda Berhad 4.62%

due 13/03/2019 2,500,000 2,508,309 2,520,643 10.86

Konsortium Prohawk Sdn Bhd

5.14% due 20/12/2024 1,000,000 1,045,822 1,043,893 4.50

Kuala Lumpur Kepong Berhad 4.58%

due 12/08/2025 250,000 255,653 252,033 1.09

Lafarge Cement Sdn Bhd 4.80%

due 13/01/2020 500,000 505,260 508,880 2.19

Malaysia Building Society Berhad

4.80% due 09/12/2022 1,000,000 1,023,634 1,015,396 4.38

SPR Energy (M) Sdn Bhd

5.22% due 16/07/2027 500,000 507,313 511,125 2.20

34




15. PORTFOLIO OF INVESTMENTS (CONTINUED)

Fair value as

a percentage of




Name of issuer (continued)

SUKUK (CONTINUED)

UEM Sunrise Berhad

4.80% due 08/04/2022 2,500,000 2,552,287 2,569,980 11.08

Total unquoted

Sukuk 21,000,000 21,411,215 21,615,548 93.16

Accumulated unrealised

gain on financial

assets at fair value

through profit or loss 204,333

Total financial assets at

fair value through

profit or loss 21,615,548

30 Sep 2016

AmBank Islamic Berhad 5.35%

due 21/12/2020 4,000,000 4,059,639 4,124,360 18.34

Bank Islam Malaysia Berhad

5.75 % due 22/4/2020 4,000,000 4,140,128 4,248,082 18.89


5.80% due 15/06/2026 1,750,000 1,780,213 1,790,118 7.96

35




15. PORTFOLIO OF INVESTMENTS (CONTINUED)

Fair value as

a percentage of




Name of issuer (continued)

SUKUK (CONTINUED)

Gamuda Berhad 4.62%

due 13/03/2019 2,500,000 2,509,734 2,531,954 11.26

Malaysia Building Society Berhad

4.80% due 09/12/2022 1,000,000 1,025,565 1,025,230 4.56

Konsortium Prohawk Sdn Bhd

5.14% due 20/12/2024 1,000,000 1,049,298 1,061,732 4.72

Kuala Lumpur Kepong Berhad 4.58%

due 12/08/2025 250,000 256,149 257,741 1.15

Prasarana Malaysia Berhad

4.29% due 24/02/2023 2,000,000 2,008,463 2,054,163 9.13

Rantau Abang Capital Berhad 0%

due 19/10/2022 2,000,000 2,043,264 2,101,605 9.34

UEM Sunrise Berhad

4.80% due 08/04/2022 2,500,000 2,551,015 2,589,577 11.51

Total unquoted

Sukuk 21,000,000 21,423,468 21,784,562 96.86

Accumulated unrealised

gain on financial

assets at fair value

through profit or loss 361,094

Total financial assets at

fair value through

profit or loss 21,784,562

36

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