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FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

ANNUAL REPORT

EASTSPRING INVESTMENTSDANA DINAMIK

Eastspring Investments Berhad 200001028634 (531241-U)

Level 22, Menara Prudential, Persiaran TRX Barat55188 Tun Razak Exchange, Kuala LumpurT: (603) 2778 3888 F: (603) 2789 7220eastspring.com/my

Client ServicesT: (603) 2778 1000 [email protected]

Dear Valued Investor,

Greetings from Eastspring Investments Berhad!

First and foremost, we would like to take this opportunity to thank you for choosing to invest with Eastspring Investments Berhad.

We are pleased to enclose a copy of the Annual/Interim/Quarterly Fund Reports of Eastspring Investments Berhad’s fund(s) for the reporting period ended 30 September 2019.

You may also download these reports from our website at www.eastspring.com/my

Should you require any assistance, please do not hesitate to contact our Client Services at 03-2778 1000.

Yours sincerely,

Raymond Tang Chee Kin Non-Independent, Executive Director and Chief Executive Officer

TABLE OF CONTENTS

Fund Information 1

Key Performance Data 4

Manager’s Report 7

Market Review 11

Rebates and Soft Commissions 15

Statement by the Manager 18

Trustee’s Report to the Unit Holders of

Eastspring Investments Dana Dinamik 19

Shariah Adviser’s Report to the Unit Holders of


Independent Auditors’ Report to the Unit Holders of


Statement of Comprehensive Income 25

Statement of Financial Position 26

Statement of Changes in Equity 27

Statement of Cash Flows 28

Summary of Significant Accounting Policies 29

Notes to the Financial Statements 41

Corporate Directory 83

FUND INFORMATION

Name of Fund Eastspring Investments Dana Dinamik (the “Fund“)

Fund Category/ Type

Mixed asset (Shariah)/growth

Fund Objective The Fund seeks to provide investors with capital appreciation by actively investing in Shariah approved equities and equity-related securities. For defensive considerations, the Fund may invest in Shariah approved debentures* and money market instruments.

Note: The Fund’s focus is on growth.

ANY MATERIAL CHANGES TO THE FUND’S OBJECTIVE WOULD REQUIRE UNIT HOLDERS’ APPROVAL.

* Shariah approved debentures refer to sukuk.

1Client Services : 03-2778 1000

Annual Report

FUND INFORMATION (CONTINUED)

Performance Benchmark

(a) If 100% of the Fund’s NAV invested in Shariah-compliant equities and Shariah-compliant equity-related securities:

FTSE Bursa Malaysia Emas Shariah Index (“FBMS“)

(b) If 100% of the Fund’s NAV invested in sukuk and Islamic liquid assets:Maybank 12-months Islamic Fixed Deposit-i

(c) If the Fund is investing in a mixture of Shariah-compliant equities and Shariah-compliant equity-related securities, sukuk and Islamic liquid assets:50% FBMS + 50% Maybank 12-months Islamic Fixed Deposit-i

The composite benchmark index is a reflection of the Fund’s average asset allocation over the long-term of 50% of the Fund’s NAV in Shariah-compliant equities and Shariah-compliant equity-related securities, and 50% of the Fund’s NAV in sukuk and Islamic liquid assets.

Source: FBMS (www.bursamalaysia.com) Maybank 12-months Islamic Fixed Deposit-i (www.maybank2u.com.my)

The performance of the Fund against the benchmark is published in the Manager’s monthly factsheet and is available from the Manager’s website at www.eastspring.com/my

Note:The risk profile of the Fund is different from the risk profile of the performance benchmark.

Fund Income Distribution Policy

At least once a year, subject to the availability of income.

Client Services : 03-2778 10002

Eastspring Investments Dana Dinamik

Breakdown of Unit Holdings by Size

As at 30 September 2019, the size of Eastspring Investments

Dana Dinamik stood at 174.345 million units

Fund Size

Breakdown of Unit Holdings

Unit Holdings

No. of Unit

Holders %

No. of Units* (‘000) %

5,000 units and below 1,703 29.66 4,804 2.76

5,001 to 10,000 units 1,271 22.14 9,119 5.23

10,001 to 50,000 units 2,351 40.95 50,271 28.83

50,001 to 500,000 units 400 6.97 37,181 21.33

500,001 units and above 16 0.28 72,969 41.85

Total 5,741 100.00 174,344 100.00

* excludes units held by the Manager.

FUND INFORMATION (CONTINUED)

Un

its

(Mill

ion

)

Oct2018

Nov2018

Dec2018

Jan2019

Feb2019

Mar2019

Apr2019

Aug2019

Sep2019

May2019

Jun2019

Jul2019

200

180

160

140

120

100

80

60

40

20

0


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Category 30.9.2019 30.9.2018 30.9.2017

(%) (%) (%)

Quoted Shariah-compliant securitiesConstruction 5.72 4.92 8.47 Consumer - - 3.23 Consumer Products and Services 12.76 14.70 4.52 Energy 7.01 7.09 - Financial Services 6.26 3.26 3.75 Health Care 7.65 3.50 5.33 Industrial Products and Services 11.48 15.15 5.54 Infrastructure Project Company - - 4.55 Islamic REITS 1.07 - 1.40 Manufacturing - - 0.64 Plantation 2.26 3.78 1.94 Property 3.56 2.65 3.26 Technology 8.60 9.79 8.88 Telecommunication and Media 5.81 2.83 - Trading/Services - - 25.70 Transportation and Logistics 0.91 1.56 - Utilities 7.88 8.18 -

80.97 77.41 77.21 Sukuk 8.33 1.75 2.19 Cash and other assets 10.70 20.84 20.60 Total 100.00 100.00 100.00

KEY PERFORMANCE DATAFOR THE FINANCIAL YEAR ENDED



KEY PERFORMANCE DATA (CONTINUED)

Category 30.9.2019 30.9.2018 30.9.2017

Net Asset Value (NAV) (RM'000) 160,977 144,512 116,265 Units In Circulation (Units '000) 174,345 146,617 121,881 Net Asset Value Per Unit (RM) 0.9233 0.9856 0.9539 Highest Net Asset Value Per Unit (RM)# 0.9245 0.9857 0.9539 Lowest Net Asset Value Per Unit (RM)# 0.9198 0.9842 0.9490 Total Return (%) - Capital Growth (6.33) 3.33 2.34 - Income Distribution 4.72 4.76 4.70 Total Return (%) (1.91) 8.25 7.15 Gross Distribution Per Unit (RM) 0.0435 0.0469 0.0446Net Distribution Per Unit (RM) 0.0435 0.0469 0.0398Management Expense Ratio (MER) (%)* 1.34 1.41 1.44Portfolio Turnover Ratio (PTR) (times)^ 0.45 0.58 0.52

# Figure shown as ex-distribution.

* There were no significant changes to the MER during the period under review.

^ There were no significant changes to the PTR during the period under review.


Annual Report

KEY PERFORMANCE DATA (CONTINUED)

1 year 1.10.2018 to

30.9.2019

3 years 1.10.2016 to

30.9.2019

5 years 1.10.2014 to

30.9.2019

(%) (%) (%)

Average total return (1.91) 4.40 3.61

Year ended1.10.2018 to

30.9.20191.10.2017 to

30.9.20181.10.2016 to

30.9.20171.10.2015 to

30.9.20161.10.2014 to

30.9.2015

(%) (%) (%) (%) (%)

Annual total return (1.91) 8.25 7.15 5.55 (0.57)

Source: The above total return of the Fund was sourced from Lipper for Investment Management.

Bases of calculation and assumptions made in calculating returns:

Percentage growth =

NAVt = NAV at the end of the period

NAV0 = NAV at the beginning of the period Performance annualised = (1 + Percentage Growth)1/n - 1

Adjusted for unit split and distribution paid out for the period

n = Number of years

Past performance is not necessarily indicative of future performance and unit prices and investment returns may go down, as well as up.

NAVt -1NAV0



MANAGER’S REPORT

Fund Performance Over the 5-year period, the Fund recorded a return of 19.41%, outperforming the benchmark return of 2.95% by 16.46%.

During the period under review, the Fund registered a return of -1.91%, outperforming the benchmark return of -2.00% by 0.09%.

The outperformance of the Fund was mainly due to positive Shariah-compliant stock selection and further boosted by its holdings in sukuk.

The Fund register a negative return for the period under review, however, met its investment objective of providing investors with capital appreciation in the medium to long term by actively investing in Shariah-compliant equities and sukuk.

The performance is calculated on NAV-to-NAV basis with gross income or dividend reinvested.

Eastspring Investments Dana Dinamik Benchmark

Eastspring Investments Dana Dinamik- 5 Years Return Vs Benchmark

5 ye

ars

% C

han

ge

Sep2014

Jan2015

May2015

Sep2015

Jan2016

May2016

Sep2016

Jan2017

May2017

Sep2017

Jan2018

May2018

Sep2018

Jan2019

May2019

Sep2019

30%

25%

20%

15%

10%

5%

0%

-5%

-10%

30%

25%

20%

15%

10%

5%

0%

-5%

-10%


Annual Report

Fund Performance(continued)

Benchmark:(a) If 100% of the Fund’s NAV invested in Shariah-compliant

equities and Shariah-compliant equity-related securities:FTSE Bursa Malaysia Emas Shariah Index (“FBMS“)

(b) If 100% of the Fund’s NAV invested in sukuk and Islamic liquid assets:Maybank 12-months Islamic Fixed Deposit-i

(c) If the Fund is investing in a mixture of Shariah-compliant equities and Shariah-compliant equity-related securities, sukuk and Islamic liquid assets:50% FBMS + 50% Maybank 12-months Islamic Fixed Deposit-i

Source: Lipper for Investment Management, www.bursamalaysia.com and www.maybank2u.com.my as at 30 September 2019.

Past performance of the Fund is not necessarily indicative of its future performance.

Analysis of Fund Performance

For the financial year ended 30 September 2019:

Income Return

Capital Return*

Total Return

Total Return of Benchmark

(%) (%) (%) (%)

4.72 (6.33) (1.91) (2.00)

* Capital return components (NAV per unit to NAV per unit).

MANAGER’S REPORT (CONTINUED)



Distribution/ Unit Split

Investment Strategy During the Period Under Review

For the Shariah-compliant equity portion, the Fund stayed overweight in technology and selected construction, financials and automotive Shariah-compliant stocks. These had helped offset the underperformance in the glove and property sectors. During the period under review, the Fund gradually reduced exposure in utilities and oil and gas sectors while at the same time built up its positions in the financials, telecommunications and selected construction Shariah-compliant stocks. The Fund had also added sukuk exposure given the more favourable outlook in view of the declining interest rate environment.

We continue to look for new Shariah-compliant stock ideas and may take gains on profitable positions and/or exit positions that have seen unfavourable changes to the company or industry dynamics. We like well managed companies backed by healthy balance sheets and strong cash flow with decent and sustainable earnings growth, preferably trading at attractive valuations.

Ex-Date 18-Sep-19

Distribution Per Unit (RM)

Gross 0.0435

Net 0.0435

Impact on NAV arising from distribution for the financial year ended 30 September 2019.

Ex-Date 18-Sep-19

(RM per Unit)

Net Asset Value before distribution 0.9652

Less: distribution (0.0435)

Net Asset Value after distribution 0.9217

No unit split were declared for the financial year ended 30 September 2019.



Annual Report

Asset Allocation

Asset Allocation30-Sep

201930-Sep

2018 Changes(%) (%) (%)

Quoted Shariah-compliant securities 80.97 77.41 3.56 Sukuk 8.33 1.75 6.58 Cash and other assets 10.70 20.84 (10.14)

Asset Allocation as at 30 September 2019

There were no significant changes in asset allocation of the Fund for the period under review.

State of Affairs ofthe Fund

There have been neither significant change to the state of affairs of the Fund nor any circumstances that materially affect any interests of the unit holders during the period under review.

Quoted Shariah-compliant securities

80.97%

Cash and other assets 10.70%

Sukuk 8.33%




MARKET REVIEW

Equity

4Q2018 was a period of correction. The Malaysian equity market corrected in tandem with global markets as the US market took a nosedive early in the 4Q2018 as US technology stocks declined sharply with the US-China trade war heating up. Domestically, the Government of Malaysia hosted a conference titled “Malaysia – A New Dawn” which was well attended by investors but may have unduly spooked investors with their “people-first”, anti-monopoly, and “sacrifice” rhetoric. This was followed by the tabling of the Malaysian Budget 2019 which focused on measures to improve disposable income for the B40 group, revised the fiscal deficit to 3.7% in 2018 and 3.4% in 2019, and amidst concerns expressed by rating agencies of Malaysia’s increasing reliance on oil revenues. Brent crude oil dropped sharply in the second half of the 4Q2018, declining by 38% quater-on-quater (“q-o-q”) to close the period at USD45.41/bbl. The oil price weakness spurred OPEC to agree to production cuts until April 2019, but the news had minimal impact on oil prices. External events towards the end of the quarter added to the volatility, such as the arrest of Huawei’s CFO in Canada, just after the US and China announced a temporary trade war truce on 30 November 2018.

For the 1Q2019, the FBM KLCI bucked the regional up-trend and was one of the worst performing indices in emerging market. The regional uplift in sentiment was due to the dramatic shift in US Federal Reserve policy to a more dovish stance and improving rhetoric from the US-China trade talks. In addition, China’s fresh stimulus measures helped sustain the positive sentiment. On the local front, investors were disappointed with Malaysian corporates as reported results were once again disappointing. 2018 was the fourth year of sub-par earnings growth. Towards the end of the 1Q2019, big cap stocks corrected post the Invest Malaysia event held on 19-20 March, amidst the risk to earnings for banks due to a possible rate cut, slower corporate earnings growth prospects and policy uncertainty.

The start of 2Q2019 saw regional markets rally on the back of positive US-China trade talks prospects and improved global outlook. However, this quickly turned sour by the month of May following the abrupt end of negotiations to the US-China trade deal with the US raising tariffs on imports from China to 25% on USD200bn of goods effective 10th May 2019. This was followed by steps to stifle China’s technology sector with what was effectively a ban on American firms from supplying parts to Chinese telecommunications giant Huawei Technologies. China retaliated with higher tariffs of up to 25% on US60bn of US goods effective 1 June 2019, with the Chinese leadership hinting at further retaliatory measures against the US. Regional markets rebounded in the month of June, with news of US and China restarting their trade talks post the G20 meeting held in Japan at the end of the month. Contrary to regional markets,


Annual Report

the Malaysian equity market struggled to perform early 2Q2019, dampened by news of the potential exclusion of Malaysia from the FTSE Russel’s World Government Bond Index (“WBGI”) after their review come September, weaker Malaysian Ringgit, cut in the OPR of 25bps, and corporate results reporting that was not very inspiring.

The first two months of 3Q2019 saw regional markets correct largely due to an escalation in the trade war and fear of increasing recession risks sparked by the further collapse in global bond yields. President Trump announced an additional 10% tariff on a further USD300bn in Chinese imports starting 1 Sept 2019, followed by the US designating China as a “currency manipulator”. By the end of 3Q2019, global and regional equity markets reversed some of the losses amid renewed optimism as US and China return to the negotiation tables again. However, markets lost some momentum later in the month following a drone attack on Saudi’s oil facilities and an impeachment inquiry launched against the US President Trump. The Malaysian equity market remained weak in light of the external headwinds faced. Domestically, the Malaysian ringgit depreciated by about 1.34% for the 3Q2019, given its correlation with the China’s CNY which depreciated 4.1% against the USD. Brent crude oil prices declined by 8.67% for the 3Q2019 on concerns of slowing global growth and demand. The June 2019 results season reported was uninspiring yet again with more downgrades in earnings by consensus. Investor sentiment domestically weakened following the end to Axiata and Telenor Asia merger talks due to “complexities”, which led to profit taking activities. FTSE Russell’s decision to defer Malaysia’s exclusion from the World Global Bond Index (“WGBI”) and keeping it on the watchlist, was a relief but could be a case of kicking the can down the road, with the next review in March 2020.

The FBM KLCI closed the year under review at 1,583.91 points, down 11.67%. The broader FBM Emas (“FBMEmas”) Index closed the period under review down by 10.61%. The MSCI Asia Pacific ex-Japan Index declined by 4.53% in USD terms.1

Bond

Following the last rate hike in December 2018, US Federal Reserve (“Fed”) maintained the Fed Fund Rate in the first half of the year at 2.25-2.50%, citing that it will be patient on interest rate hikes. However, as economic threats loom in the face of global weakness and heightened geopolitical risks, the Fed delivered its highly anticipated cut of 25bps in its meeting in July, and another cut of 25bps in September citing modest mid-cycle adjustments to its monetary policy, bringing the Fed Fund Rate to 1.75%-2.00%. The September adjustment was made as an insurance against downside risk to growth albeit the US is still showing sustained expansion of economic activity, strong labor market conditions and an inflation rate that is near the Fed’s symmetric 2%

1 Source: Bloomberg: World indices



objective. Similarly, many central banks around the world – European Central Bank, Reserve Bank of Australia, Reserve Bank of New Zealand, Reserve Bank of India, Bank of Indonesia, Bank Negara Malaysia (“BNM”), etc. – have started to loosen monetary policy either to combat an already slowing growth or protect against downside risk. The synchronised global easing led to lower yields in the global bond market.

Externally, the ongoing trade tensions between US and China dominated news head-lines during the period under review with rounds of de-escalation and re-escalation, sending global financial markets into cycles of risk-on and risk-off modes. After the latest exchange of tariff in August where additional tariffs were imposed on virtually all of the two economies’ USD660 billion in annual trade, market cheered on the news of a fresh round of high-level talks that had been agreed in a phone call between the two countries’ officials in early September. Should it take place, the meeting will be the first in-person, high-level discussion since the failed US-China trade meeting in July. While the news has renewed hope of a trade resolution between the two econo-mies, investors remained skeptical due to deep differences between US and China over the former’s demands for sweeping changes to China’s practice on intellectual proper-ty protections, transfer of US technology to Chinese companies and curbs on subsidies to China’s state-owned enterprises. Market will be following the progress of the talks closely and given little clarity in sight at the moment, the lingering uncertainties will continue to weigh on global sentiments and add volatilities to the market.

BNM cut the Overnight Policy Rate (“OPR”) by 25bps to 3.00% on 7 May 2019 after leaving the rate unchanged since January 2018 as a pre-emptive move to insure against the downside risks in the global and Malaysian economy due to the uncertainties in the external environment. In the following two meetings in July and September, BNM maintained its policy rate at 3.00%. Notwithstanding expectation from several economists of a consequential rate cut, stronger economic growth performance in the second quarter accorded BNM time to take a wait-and-see approach to assess the impact of the earlier cut and the outcome of several ‘risk’ events in the quarter such as Federal Open Market Committee (“FOMC”) meeting and FTSE Russell index review announcement. The overall tone of the latest policy statement in September was still neutral and the assessment on the stance of monetary policy at the point of meeting was still “accommodative and supportive of economic activity”, which suggests that BNM’s future monetary policy decisions are likely to be data-dependent.

In April 2019, FTSE Russell announced changes to its market accessibility methodology which resulted in Malaysia being placed in its watchlist for potential exclusion from the WGBI in the September 2019 index review. Since then, Bank Negara has announced several initiatives to deepen and broaden onshore foreign exchange and bond market liquidity. These new measures are expected to improve Malaysia’s market accessibility to the world and may help address the liquidity concerns which was highlighted by


Annual Report

FTSE Russell. The new initiatives include (1) enhancements to repo market liquidity and flexibility, (2) physical delivery for MGS futures, (3) measures to enhance FX market accessibility and liquidity, (4) increased flexibility for dynamic hedging programme, (5) FX transaction & documentation process and, (6) Ringgit liquidity beyond local trading hours. Despite the additional measures introduced by BNM to deepen and broaden the onshore financial market, FTSE Russell still maintained Malaysia in its watchlist for exclusion from WGBI in September, citing expectation for continued discussion with BNM as well as the index users. The next index review is slated to be in March 2020, where market volatility is expected to resurface prior to the announcement as investors weigh in the different outcome probabilities.

On the economic front, Malaysia’s Gross Domestic Product (“GDP”) figures for the second quarter of 2019 were released in August, registering a higher-than-consensus growth of 4.9% (1Q2019: 4.5%), supported by continued expansion in domestic demand. On a quarter-on-quarter seasonally-adjusted basis, the economy grew by 1.0% (1Q2019: 1.1%). Private sector activity continued to drive growth – private consumption increased +7.8% (1Q2019: 7.6%), which was supported by firm household spending backed by continued income growth and moderately low inflation, further boosted by selected Government measures such as cash handouts to the B40 segment. On demand side, all sectors of the economy registered positive growth in the second quarter, notably the mining sector which rebounded from the first quarter contraction. For the year, official BNM GDP growth forecast remained at 4.3 – 4.8%.

The latest headline inflation in August 2019 remained relatively stable at +1.50% year-on-year (“y-o-y“) (July: +1.4% y-o-y) driven by Furnishings, Household Equipment & Routine Household Maintenance (+3.2%), Food & Non-Alcoholic Beverages (+2.6%), Alcoholic Beverages & Tobacco (+2.5%), Miscellaneous Goods & Services (+2.5%), Recreation Services & Culture (+2.3%) and Communication (+2.2%). Similarly, core inflation for the month remained stable at +2.0% y-o-y (July: +2.0% y-o-y). For the remaining of the year, headline inflation is expected to hover around the current level as implementation of the fuel subsidy rationalization will only take place on 1 January 2020. For the full year, BNM maintains its inflation forecast at 0.70% - 1.70%.

For the period under review, the 3-years, 5-years, 10-years and 15-years Malaysian Government Securities (“MGS”) yields decreased by 49bps, 51bps, 75bps and 94bps to close at 3.12%, 3.24%, 3.32% and 3.55% respectively.2 MGS yield curve bull-flattened during the period mirroring the move in the global bond market on the back of (1) escalation of trade tension between US and China, (2) consecutive global growth outlook downgrades amidst materialisation of downside risk, and (3) a series of policy rate cuts by global central banks with market’s expectation of more cuts.



Meanwhile, corporate bond yields generally moved in tandem with sovereign bond yields, albeit at a lag. Activities in the corporate bond market continued to be vibrant, supported by ample liquidity and a stable credit environment.

On the supply front, total corporate bond issuances during the period stood around RM87billion. Major primary issuances during the period were mainly government guaranteed bonds and highly-rated corporates bonds. Notable issuances include RM12.5billion from Danainfra National Berhad (GG), RM9.0billion from Lembaga Pembiayaan Perumahan Sektor Awam (GG), RM6.6billion from Malayan Banking Berhad (AA1 & A1), RM5.0billion from Cagamas Berhad (AAA) and RM4.6billion from Pengurusan Air SPV Berhad (GG & AAA).

REBATES AND SOFT COMMISSIONS

During the period under review, the Manager and its delegates (if any) received goods and services which directly assist the investment management of the Fund, including research and advisory services, market analyses, data and quotation services, and computer hardware and software used for and/or in support of the investment process of fund managers.

The Manager and its delegates (if any) have not received any rebates or shared any commissions from any brokers during the same period under review.

2 Source: Bloomberg


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EASTSPRING INVESTMENTS DANA DINAMIKFINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019


Annual Report

STATEMENT BY THE MANAGER

We, Tang Chee Kin and Iskander Bin Ismail Mohamed Ali, being two of the Directors of Eastspring Investments Berhad, do hereby state that, in the opinion of the Manager, the accompanying financial statements set out on pages 25 to 82 are drawn up in accordance with the provisions of the Deed and give a true and fair view of the financial position of the Fund as at 30 September 2019 and of its financial performance, changes in equity and cash flows for the financial year ended on that date in accordance with the Malaysian Financial Reporting Standards and International Financial Reporting Standards.

For and on behalf of the Manager,

EASTSPRING INVESTMENTS BERHAD

TANG CHEE KINExecutive Director/Chief Executive Officer

ISKANDER BIN ISMAIL MOHAMED ALIIndependent, Non-Executive Director

Kuala LumpurDate: 22 November 2019



TRUSTEE’S REPORT TO THE UNIT HOLDERS OF EASTSPRING INVESTMENTS DANA DINAMIK

We have acted as Trustee for Eastspring Investments Dana Dinamik (the “Fund”) for financial year ended 30 September 2019. To the best of our knowledge, for the financial year under review, Eastspring Investments Berhad (the “Manager”) has operated and managed the Fund in accordance with the following:-

a. 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;

b. valuation and pricing for the Fund is carried out in accordance with the Deed(s) of the Fund and any regulatory requirements; and

c. creation and cancellation of units for the Fund are carried out in accordance with the Deed(s) of the Fund and any regulatory requirements.

We are of the view that the distribution made during the financial year ended 30 September 2019 by the Manager is not inconsistent with the objectives of the Fund.

For Deutsche Trustees Malaysia Berhad

Ng Hon Leong Richard Lim Hock Seng

Head, Trustee Operations Chief Executive Officer



Annual Report

SHARIAH ADVISER’S REPORT TO THE UNIT HOLDERSOF EASTSPRING INVESTMENTS DANA DINAMIK

We have acted as the Shariah Adviser of Eastspring Investments Berhad, the Manager of Eastspring Investments Dana Dinamik (“the Fund”) for the financial year ended 30 September 2019.

Our responsibility is to ensure that the procedures and processes employed by the Manager as well as the provisions of the Fund’s Deed registered with the Securities Commission (“SC”) are all in accordance with Shariah principles.

In our opinion, based on the periodic reports submitted to us, the Manager has managed and administered the Fund in accordance with Shariah principles and has complied with applicable guidelines, rulings and decisions issued by the Shariah Advisory Council (“SAC”) of the SC for the financial year ended 30 September 2019.

We confirm that the investment portfolio of the Fund comprises securities and instruments which have been classified as Shariah-compliant by either the SAC of the SC or the SAC of Bank Negara Malaysia (“BNM”). As for securities and instruments which have not been classified by the SAC of the SC nor the SAC of BNM, we have reviewed and determined the Shariah status of the said securities and instruments.

For and on behalf of the Shariah Adviser,BIMB SECURITIES SDN BHD

IR. DR. MUHAMAD FUAD ABDULLAHDesignated Shariah Person

Kuala Lumpur Date: 22 November 2019



INDEPENDENT AUDITORS’ REPORT TO THE UNIT HOLDERS OF EASTSPRING INVESTMENTS DANA DINAMIK

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Our opinion

In our opinion, the financial statements of Eastspring Investments Dana Dinamik (“the Fund”) give a true and fair view of the financial position of the Fund as at 30 September 2019, and of its financial performance and its cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards.

What we have audited

We have audited the financial statements of the Fund, which comprise the statement of financial position as at 30 September 2019, 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 25 to 82.

Basis for opinion

We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the “Auditors’ responsibilities for the audit of the financial statements” section of our report.

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

Independence and other ethical responsibilities

We are independent of the 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.


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Information other than the financial statements and auditors’ report thereon

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.

Responsibilities of the Manager for the financial statements

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 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 have no realistic alternative but to do so. Auditors’ responsibilities for the audit of the 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 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:

a. 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.

b. 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.

c. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Manager.

d. 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.

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.


Annual Report

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.

OTHER MATTERS

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.

PRICEWATERHOUSECOOPERS PLT LLP0014401-LCA & AF 1146Chartered Accountants




STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

Note 2019 2018

RM RM

INVESTMENT INCOMEGross dividend income 3,202,915 2,829,942Profit income from Islamic deposits with licensed financial institutions 628,030 562,870Profit income from sukuk 266,191 104,329Net (loss)/gain on financial assets at fair value through profit or loss 7 (3,333,414) 8,720,819

763,722 12,217,960

EXPENSESManagement fee 3 (1,987,391) (1,587,063)Trustee fee 4 (111,294) (88,876)Audit fee (7,200) (7,200)Tax agent fee (3,400) (3,400)Other expenses (22,976) (33,786)GST charges (985) (66,962)Transaction cost (336,755) (466,025)

(2,470,001) (2,253,312)

(LOSS)/PROFIT BEFORE TAXATION (1,706,279) 9,964,648

TAXATION 6 (1,730) (2,078)

(LOSS)/PROFIT AFTER TAXATION AND TOTAL COMPREHENSIVE (LOSS)/INCOME (1,708,009) 9,962,570

(Loss)/profit after taxation is made up of the following:

Realised amount 483,049 3,172,098 Unrealised amount (2,191,058) 6,790,472

(1,708,009) 9,962,570

The accompanying summary of significant accounting policies and notes to the financial statements

form an integral part of these financial statements.


Annual Report

STATEMENT OF FINANCIAL POSITIONAS AT 30 SEPTEMBER 2019

Note 2019 2018

RM RM

ASSETSCash and cash equivalents 8 16,206,958 29,362,734Amount due from brokers 184,346 15,635Amount due from Manager 1,006,567 1,390,259Dividends receivable 422,898 358,928Tax recoverable - 1,730Financial assets at fair value through profit or loss 7 143,722,505 114,417,234TOTAL ASSETS 161,543,274 145,546,520

LIABILITIESAmount due to Manager 372,258 136,988Accrued management fee 164,743 145,394Amount due to Trustee 9,226 8,142Amount due to brokers - 544,116Distribution payable - 173,057Other payables and accruals 19,987 26,968TOTAL LIABILITIES 566,214 1,034,665

NET ASSET VALUE OF THE FUND 160,977,060 144,511,855

EQUITYUnit holders’ capital 125,331,351 104,540,190Retained earnings 35,645,709 39,971,665

NET ASSET ATTRIBUTABLE TO UNIT HOLDERS 160,977,060 144,511,855

NUMBER OF UNITS IN CIRCULATION 10 174,345,119 146,616,820

NET ASSET VALUE PER UNIT (EX-DISTRIBUTION) (RM) 0.9233 0.9856





STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

Note

Unit holders’

capitalRetained earnings Total

RM RM RM

Balance as at 1 October 2018 104,540,190 39,971,665 144,511,855

Movement in unit holders’ contribution:

Creation of units from applications 58,178,150 - 58,178,150Creation of units from distribution 7,082,666 - 7,082,666Cancellation of units (39,832,430) - (39,832,430)Total comprehensive loss for the financial year - (1,708,009) (1,708,009)Distribution (Gross: 4.35 sen/Net: 4.35 sen) 5 (4,637,225) (2,617,947) (7,255,172)

Balance as at 30 September 2019 125,331,351 35,645,709 160,977,060

Balance as at 1 October 2017 83,399,801 32,865,322 116,265,123

Movement in unit holders’ contribution:

Creation of units from applications 58,238,481 - 58,238,481Creation of units from distribution 6,376,632 - 6,376,632Cancellation of units (39,781,262) - (39,781,262)Total comprehensive income for the financial year - 9,962,570 9,962,570Distribution (Gross: 4.69 sen/Net: 4.69 sen) 5 (3,693,462) (2,856,227) (6,549,689)

Balance as at 30 September 2018 104,540,190 39,971,665 144,511,855




Annual Report

STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

Note 2019 2018

RM RM

CASH FLOWS FROM OPERATING ACTIVITIESProceeds from sale of Shariah-compliant investments 56,115,764 66,763,355Purchase of Shariah-compliant investments (89,677,086) (85,987,929)Dividends received 3,138,945 2,552,699Profit income received from Islamic deposits with licensed financial institutions 628,030 562,870Profit income received from sukuk 139,247 106,518Management fee paid (1,968,042) (1,543,014)Trustee fee paid (110,210) (86,409)Payment for other fees and expenses (41,542) (126,636)Net cash used in operating activities (31,774,894) (17,758,546)

CASH FLOWS FROM FINANCING ACTIVITIESCash proceeds from units created 58,561,840 72,092,862Payments for cancellation of units (39,597,160) (39,747,593)Distribution paid (345,562) (26,358)Net cash generated from financing activities 18,619,118 32,318,911

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (13,155,776) 14,560,365

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE FINANCIAL YEAR 29,362,734 14,802,369

CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR 8 16,206,958 29,362,734





The following accounting policies have been used in dealing with items which are considered material in relation to the financial statements.

A. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

The financial statements have been prepared under the historical cost convention in accordance with the Malaysian Financial Reporting Standards (“MFRS”) and International Financial Reporting Standards (“IFRS”), as modified by financial assets at fair value through profit or loss.

The preparation of financial statements in conformity with the 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 judgment 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 M to the financial statements.

a. Standards, amendments to published standards and interpretations that are effective:

The Fund has applied the following amendments for the first time for the financial year beginning on 1 October 2018:

• MFRS 9 ‘Financial Instruments’ became effective for annual periods beginning on or after 1 January 2018. It addresses the classification, measurement and derecognition of financial assets and liabilities and replaces the multiple classification and measurement models in MFRS 139.

Classification and measurement of debt assets is driven by the entity’s business model for managing the financial assets and the contractual cash flow characteristics of the financial assets. A debt instrument1 is measured at amortised cost if the objective of the business model is to hold the financial

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019


Annual Report

asset for the collection of the contractual cash flows and the contractual cash flows under the instrument solely represent payments of principal and interest2 (“SPPI”). A debt instrument1 is measured at fair value through other comprehensive income if the objective of the business model is to hold the financial asset both to collect contractual cash flows from SPPI and to sell. All other debt instruments1 must be recognised at fair value through profit or loss. An entity may however, at initial recognition, irrevocably designate a financial asset as measured at fair value through profit or loss if doing so eliminates or significantly reduces a measurement or recognition inconsistency. Derivative and equity instruments3 are measured at fair value through profit or loss unless, for equity instruments3 not held for trading, an irrevocable option is taken to measure at fair value through other comprehensive income. MFRS 9 also introduces a new expected credit loss (“ECL”) impairment model.

MFRS 9 has been applied retrospectively by the Fund and did not result in a change to the classification or measurement of financial instruments as outlined in Note F.

The Fund’s investment portfolio continues to be classified as fair value through profit or loss and other financial assets which are held for collection continue to be measured at amortised cost. There was no material impact on adoption from the application of the new impairment model.

There are no other standards, amendments to standards or interpretations that are effective for annual periods beginning on 1 October 2018 that have a material effect on the financial statements of the Fund.

1 For the purposes of the investments made by the Fund, debt instruments refer to sukuk.2 For the purposes of this Fund, interest refers to profits earned from Shariah-compliant investments.3 For the purposes of the investments made by the Fund, equity instruments and derivatives refer to Shariah-compliant equity instruments and Islamic derivatives.



b. New standards, amendments and interpretations effective after 1 October 2019 and have not been early adopted.

• Amendments to MFRS 112 ‘Income Taxes’ (effective from 1 January 2019) clarify that where income tax consequences of dividends on financial instruments classified as equity is recognised (either in profit or loss, other comprehensive income or equity) depends on where the past transactions that generated distributable profits were recognised.

Accordingly, the tax consequences are recognised in profit or loss when an entity determines payments on such instruments are distribution of profits (that is, dividends). Tax on dividend should not be recognised in equity merely on the basis that it is related to a distribution to owners.

The Fund will apply this standard when effective. This standard is not expected to have a significant impact on the Fund’s financial statements.

B. INCOME RECOGNITION

Profit income from short-term Islamic deposits is recognised on an accrual basis using the effective profit rate method.

Up to 30 September 2018, when a receivables is impaired, the Fund reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective profit rate of the instrument, and continue unwinding the discount as profit income. Profit income on impaired receivables are recognised using the original effective profit rate.

From 1 October 2018, profit income is calculated by applying the effective profit rate to the gross carrying amount of a financial asset except for financial assets that are subsequently become credit-impaired. For credit-impaired financial assets the effective profit rate is applied to the net carrying amount of the financial asset (after deduction of the loss allowance).

Dividend income is recognised on the ex-dividend date, when the right to receive the dividend has been established.

Realised gain or loss on disposal of quoted Shariah-compliant securities is accounted for as the difference between the net disposal proceeds and the carrying amount of Shariah-compliant investments, determined on a weighted average cost basis.


Annual Report

Realised gain or loss on disposal of unquoted sukuk is accounted for as the difference between the net disposal proceeds and the carrying amount of the Shariah-compliant investments, determined on cost adjusted for accretion of discount or amortisation of premium.

C. TRANSACTION COSTS

Transaction costs are costs incurred to acquire financial assets or liabilities at fair value through profit or loss. They include fees and commissions paid to brokers and dealers. Transaction costs, when incurred, are immediately recognised in profit or loss as an expense.

D. TAXATION

Current tax expense is determined according to the Malaysian tax laws at the current rate based upon the taxable income earned during the financial year.

Withholding taxes on investment income from Real Estate Investment Trusts (“REITs”) are based on tax regime of the respective countries that the Fund invests in. Such withholding taxes are not “income tax” in nature and are recognised and measured based on the requirements of MFRS 137. They are presented within other expenses line in the statement of comprehensive income.

E. PRESENTATION AND FUNCTIONAL CURRENCY

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 presentation and functional currency.

F. FINANCIAL ASSETS AND FINANCIAL LIABILITIES

i. Classification

Up to 30 September 2018, the Fund designates its investment in quoted Shariah-compliant securities and unquoted sukuk as financial assets at fair value through profit or loss at inception.

Financial assets are designated at fair value through profit or loss when they are managed and their performance evaluated on a fair value basis.



Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and have been included in current assets.

The Fund’s receivables comprise cash and cash equivalents, amount due from

Manager, amount due from brokers and dividends receivable.

Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability.

The Fund’s classifies accrued management fee, amount due to Trustee, amount due to Manager, amount due to brokers, distribution payable and other payables and accruals as other financial liabilities.

From 1 October 2018, the Fund classifies its financial assets in the following measurement categories:

• those to be measured subsequently at fair value (either through other comprehensive income (“OCI”) or through profit or loss), and

• those to be measured at amortised cost

The Fund classifies its investments based on both the Fund’s business model for managing those financial assets and the contractual cash flow characteristics of the financial assets. The portfolio of financial assets is managed and performance is evaluated on a fair value basis. The Fund is primarily focused on fair value information and uses that information to assess the assets’ performance and to make decisions. The Fund has not taken the option to irrevocably designate any equity securities as fair value through other comprehensive income. The contractual cash flows of the Fund’s debt instruments1 are solely principal and interest2, however, these instruments are neither held for the purpose of collecting contractual cash flows nor held both for collecting contractual cash flows and for sale. The collection of contractual cash flows is only incidental to achieving the Fund’s business model’s objective. Consequently, all investments are measured at fair value through profit or loss.

The Fund classifies cash and cash equivalents, amount due from brokers, amount due from Manager and dividends receivable as financial assets at amortised cost as these financial assets are held to collect contractual cash flows consisting of the amount outstanding.


Annual Report

The Fund classifies amount due to Manager, accrued management fee, amount due to Trustee and other payables and accruals as financial liabilities measured at amortised cost.

ii. Recognition and measurement

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 asset. Shariah-compliant investments are initially recognised at fair value. Transaction costs are expensed in the statement of comprehensive income.

Financial assets are derecognised when the rights to receive cash flows from the Shariah-compliant investments have expired or have been transferred and the Fund has transferred substantially all risks and rewards of ownership.

Financial liabilities are recognised in the statement of financial position when, and only when, the Fund becomes a party to the contractual provisions of the financial instrument.

Financial liabilities are derecognised when it is extinguished; i.e when the obligation specified in the contract is discharged or cancelled or expired.

Unrealised 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 financial year in which they arise. Any unrealised gains however are not distributable.

Dividend income from financial assets at fair value through profit or loss is recognised in the statement of comprehensive income as part of gross dividend income when the Fund’s right to receive payments is established.

Quoted Shariah-compliant securities in Malaysia are valued at the last done market price quoted on the Bursa Malaysia Securities Berhad (“Bursa Securities”) at the date of the statement of financial position.

If a valuation based on the market price does not represent the fair value of the Shariah-compliant securities, for example during abnormal market conditions or when no market price is available, including in the event of a suspension in the



quotation of the Shariah-compliant securities for a period exceeding 14 days, or such shorter period as agreed by the Trustee, then the Shariah-compliant securities are valued as determined in good faith by the Manager, based on the methods or basis approved by the Trustee after appropriate technical consultation.

Sukuk are carried at cost and adjusted for any amortisation of premium or accretion of discount from acquisition date to maturity date. The carrying cost is revalued to reflect its fair value on a daily basis using the net present value method based on fair value prices quoted by a bond pricing agency (“BPA”) registered with the Securities Commission (“SC”). Where such quotations are not available or where the Manager is of the view that the price quoted by the BPA for a specific unquoted sukuk differs from the market price by more than 20 basis points, the Manager may use the market price, provided that the Manager:

i. records its basis for using a non-BPA price;ii. obtains necessary internal approvals to use the non-BPA price; andiii. keeps an audit trail of all decisions and basis for adopting the market yield.

Islamic deposits with licensed 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 Islamic deposits.

Receivables and other financial liabilities are subsequently carried at amortised cost using the effective profit rate method.

iii. Impairment for assets carried at amortised costs

Up to 30 September 2018, for assets carried at amortised cost, the Fund assesses at the end of the reporting financial year whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset is or a group of financial assets are impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s


Annual Report

original effective profit rate. The carrying amount is reduced and the amount of the loss is recognised in statement of comprehensive income. If ‘receivables’ have a variable profit rate, the discount rate for measuring any impairment loss is the current effective profit rate determined under the contract.

As a practical expedient, the Fund may measure impairment on the basis of an instrument’s fair value using an observable market price.

If, in a subsequent year, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the obligor’s credit rating), the reversal of the previously recognised impairment loss is recognised in statement of comprehensive income.

When an asset is uncollectible, it is written off against the related allowance account. Such assets are written off after all the necessary procedures have been completed and the amount of the loss has been determined.

From 1 October 2018 onwards, the Fund measures credit risk and expected credit losses using probability of default, exposure at default and loss given default. Management considers both historical analysis and forward looking information in determining any expected credit loss. Management considers the probability of default to be close to zero as these instruments have a low risk of default and the counterparties have a strong capacity to meet their contractual obligations in the near term. As a result, no loss allowance has been recognised based on 12 months expected credit losses as any such impairment would be wholly insignificant to the Fund.

Significant increase in credit risk

A significant increase in credit risk is defined by management as any contractual payment which is more than 30 days past due.

Definition of default and credit-impaired financial assets

Any contractual payment which is more than 90 days past due is considered credit impaired.



Write-off

The Fund writes off financial assets, in whole or in part, when it has exhausted all practical recovery efforts and has concluded that there is no reasonable expectation of recovery. The assessment of no reasonable expectation of recovery is based on unavailability of obligor’s sources of income or assets to generate sufficient future cash flows to pay the amount. The Fund may write-off financial assets that are still subject to enforcement activity. Subsequent recoveries of amounts previously written off will result in impairment gains. There are no write-offs/recoveries during the financial year.

G. AMOUNTS DUE FROM/(TO) BROKERS

Amounts due from and to brokers represent receivables for Shariah-compliant securities sold and payables for Shariah-compliant securities purchased that have been contracted for but not yet settled or delivered on the statement of financial position date respectively. The amount due from brokers balance is held for collection.

These amounts are recognised initially at fair value and subsequently measured at amortised cost. At each reporting date, the Fund shall measure the loss allowance on amounts due from broker at an amount equal to the lifetime expected credit losses if the credit risk has increased significantly since initial recognition. If, at the reporting date, the credit risk has not increased significantly since initial recognition, the Fund shall measure the loss allowance at an amount equal to 12-months expected credit losses. Significant financial difficulties of the broker, probability that the broker will enter bankruptcy or financial reorganisation, and default in payments are all considered indicators that a loss allowance may be required.

If the credit risk increases to the point that it is considered to be credit impaired, profit income will be calculated based on the gross carrying amount adjusted for the loss allowance. A significant increase in credit risk is defined by management as any contractual payment which is more than 30 days past due.



Annual Report

H. CASH AND CASH EQUIVALENTS

For the purpose of the statement of cash flows, cash and cash equivalents comprise bank balance and Islamic deposits with licensed financial institutions that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

I. UNIT HOLDERS’ CAPITAL

The unit holders’ contributions to the Fund meet the criteria to be classified as equity instruments under MFRS 132 “Financial Instruments: Presentation”. Those criteria include:

• the units entitle the holder to a proportionate share of the Fund’s net assets value;

• the units are the most subordinated class and class features are identical;

• there is no contractual obligations to deliver cash or another financial asset other than the obligation on the Fund to repurchase; and

• the total expected cash flows from the units over its life are based substantially on the profit or loss of the Fund.

The outstanding units are carried at the redemption amount that is payable at each

financial year if a unit holder exercises the right to put the unit back to the Fund.

Units are created and cancelled at prices based on the Fund’s net asset value per unit at the time of creation or cancellation. The Fund’s net asset value per unit is calculated by dividing the net assets attributable to unit holders with the total number of outstanding units.



J. DISTRIBUTION

A distribution to the Fund’s unit holders is accounted for as a deduction from realised reserves. A proposed distribution is recognised as a liability in the period in which it is approved by the Trustee.

K. SEGMENTAL INFORMATION

Operating segments are reported in a manner consistent with the internal reporting used by chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Investment Committee of the Fund’s Manager that undertakes strategic decisions for the Fund.

L. FAIR VALUE OF FINANCIAL INSTRUMENTS

Shariah-compliant financial instruments comprise financial assets and financial liabilities. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e. an exit price). The information presented herein represents the estimates of fair values as on the statement of financial position date.


Annual Report

M. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS IN APPLYING ACCOUNTING POLICIES

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 contents on the estimates, certain key variables that are anticipated to have material impact to the Funds’ results and financial position are tested for sensitivity to changes in the underlying parameters.

Estimates and judgments 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.

a. Estimate of fair value of sukuk

The Fund uses significant judgment in determining whether an investment is impaired. The Fund evaluates, among other factors, the duration and extent to which the fair value of the investment is less than cost, and the financial health and near-term business outlook for the investee, including factors such as industry and sector performance, macroeconomic factors and speculation.

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.

Sukuk are valued using fair value prices quoted by a bond pricing agency (“BPA”).

Where the Manager is of the view that the price quoted by BPA for a specific sukuk differs from the market price by more than 20 basis points, the Manager may use the market price, provided that the Manager records its basis for using a non-BPA price, obtains necessary internal approvals to use the non-BPA price, and keeps an audit trail of all decisions and basis for adopting the use of

non-BPA price.



1. INFORMATION ON THE FUND

Eastspring Investments Dana Dinamik (the “Fund”) was constituted pursuant to the execution of a Deed dated 19 February 2004 as amended by a Master Supplemental Deed dated 12 July 2007 and a Second Supplemental Master Deed dated 30 November 2009 between HSBC (Malaysia) Trustee Bhd (“HSBC Trustee”) and Eastspring Investments Berhad (the “Manager”). The Fund replaced HSBC Trustee with Deutsche Trustees Malaysia Berhad (the “Trustee”) effective 1 October 2010. A Supplemental Master Deed was entered into between the Manager and the Trustee on 30 July 2010 to effect the change of trustee from HSBC Trustee to the Trustee followed by a Second Supplemental Master Deed dated 28 January 2011, a Third Supplemental Master Deed dated 9 March 2011, a Fourth Supplemental Master Deed dated 20 January 2012, a Fifth Supplemental Master Deed dated 26 March 2014, a Sixth Supplemental Master Deed dated 2 January 2015, a Seventh Supplemental Master Deed dated 11 July 2016, an Eighth Supplemental Master Deed dated 25 January 2017, a Ninth Supplemental Master Deed dated 11 December 2017 and a Tenth Supplemental Master Deed dated 4 June 2018 (collectively referred to as the “Deed”).

The Fund was launched on 25 February 2004 and will continue its operations until terminated by the Trustee or the Manager as provided under Part 12 of the Deed.

The Fund may invest in Shariah-compliant securities traded on Bursa Malaysia and other market considered as eligible market, sukuk, Islamic futures contracts and any other Shariah-compliant investments approved by the SC from time to time. All Shariah-compliant investments will be subjected to the Securities Commission’s (“SC”) Guidelines on Unit Trust Funds, the Deed and the objective of the Fund.

The Fund seeks to provide investors with capital appreciation by actively investing in Shariah approved equity and equity-related securities. For defensive considerations, the fund may invest in Shariah-approved debentures and money market instruments.

The Manager is a company incorporated in Malaysia and is related to Prudential Plc., a public listed company in the United Kingdom. The principal activity of the Manager is the establishment and management of unit trust funds and asset management.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019


Annual Report

2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Fund is exposed to a variety of risks which include market risk (inclusive of price risk and exposure to interest rate risk), non-compliance risk, Shariah status reclassification risk, fund management risk, liquidity risk, capital risk and credit/default risk.

Financial risk management is carried out through internal control processes adopted by the Manager and adherence to the investment restrictions as stipulated in the Deed.

Financial instruments of the Fund are as follows:

Note

Financial assets at

amortised cost

Financial assets at fair

value through profit or loss Total

RM RM RM

2019

Cash and cash equivalents 8 16,206,958 - 16,206,958Amount due from brokers 184,346 - 184,346Amount due from Manager 1,006,567 - 1,006,567Dividends receivable 422,898 - 422,898Quoted Shariah-compliant

securities 7 - 130,314,400 130,314,400Sukuk 7 - 13,408,105 13,408,105

17,820,769 143,722,505 161,543,274



Note Receivables

Financial assets at fair

value through profit or loss Total

RM RM RM

2018

Cash and cash equivalents 8 29,362,734 - 29,362,734Amount due from brokers 15,635 - 15,635Amount due from Manager 1,390,259 - 1,390,259Dividends receivable 358,928 - 358,928Quoted Shariah-compliant

securities 7 - 111,884,816 111,884,816Sukuk 7 - 2,532,418 2,532,418

31,127,556 114,417,234 145,544,790

All liabilities are financial liabilities which are carried at amortised cost.

Market risk

i. Price risk

This risk refers to changes and developments in regulations, politics and the economy of the country. The very nature of an Islamic Unit Trust Fund, however, helps mitigate this risk because a Fund would generally hold a well-diversified portfolio of Shariah-compliant securities from different market sectors that the collapse of any one Shariah-compliant security or any one market sector would not impact too greatly on the value of the Fund.


Annual Report

The table below shows assets of the Fund as at 30 September which are exposed to price risk:

2019 2018

RM RM

Quoted Shariah-compliant securities designated at fair value through profit or loss 130,314,400 111,884,816

Sukuk designated at fair value through profit or loss* 13,408,105 2,532,418

* Includes profit receivable of RM157,175 (2018: RM21,618).

The following table summarises the sensitivity of the Fund’s net asset value and (loss)/profit after tax to movements in prices of quoted Shariah-compliant securities and sukuk at the end of the reporting financial year. The analysis is based on the assumptions that the market price of the quoted Shariah-compliant securities and sukuk increased by 5% and decreased by 5% with all other variables held constant. This represents management’s best estimate of a reasonable possible shift in the quoted Shariah-compliant securities and sukuk, having regard to the historical volatility of the prices.

% Change in priceMarket

value

Increase/(decrease) in (loss)/profit

after tax and net asset value

RM RM

2019

+5% 150,743,597 7,178,267-5% 136,387,063 (7,178,267)

2018

+5% 120,115,397 5,719,781-5% 108,675,835 (5,719,781)



ii. Exposure to interest rate risk

Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates.

In general, when interest rates rise, sukuk valuation will tend to fall and vice versa. Therefore, the NAV of the Fund may also tend to fall when interest rates rise or are expected to rise. However, investors should be aware that should the Fund holds sukuk till maturity, such valuation fluctuations would dissipate as it approaches maturity, and thus the growth of the NAV shall not be affected at maturity. In order to mitigate interest rates exposure of the Fund, the Manager will manage the duration of the portfolio via shorter or longer tenured assets depending on the view of the future interest rate trend of the Manager, which is based on its continuous fundamental research and analysis.

Investors should note that the movement in valuation of sukuk and Islamic money market instruments are benchmarked against interest rates. As such, the investments are exposed to the movement of the interest rates.

This risk is crucial since sukuk portfolio management depends on forecasting interest rate movements. Valuation of sukuk move inversely to interest rate movements, therefore as interest rates rise, the valuation of sukuk decrease and vice versa. Furthermore, sukuk with longer maturity and lower profit rates are more susceptible to interest rate movements.

Such investments may be subject to unanticipated rise in interest rates which may impair the ability of the issuers to make payments of profit income and principal, especially if the issuers are highly leveraged. An increase in interest rates may therefore increase the potential for default by an issuer.

The Fund’s investments in Islamic deposits with licensed financial institutions are short term in nature. Therefore, exposure to interest rate fluctuations is minimal.


Annual Report

Interest rate is a general economic indicator that will have an impact on the management of the Fund regardless whether it is an Islamic Unit Trust Fund or otherwise. It does not in any way suggest that the Fund will invest in conventional financial instruments. All the investments are carried out for the Fund are in accordance with Shariah requirements.

The table below summarises the sensitivity of the Fund’s (loss)/profit after tax and NAV to movements in valuation of sukuk held by the Fund as a result of movement in interest rate. The analysis is based on the assumptions that the interest rate changed by 1% (2018: 1%) with all other variables held constant. This represents management’s best estimate of a reasonable possible shift in the interest rate, having regard to the historical volatility of the interest rate.

2019 2018

% Movement in interest rate

Impact on loss after tax/ change in net

asset value

Impact on profit after tax/

change in net asset value

RM RM

Sukuk

+1% (2018:+1%) (38,844) (726)-1% (2018:-1%) 39,022 726

Non-compliance risk

Non-compliance risk arises when the Manager and others associated with the Fund are not compliant to the rules set out in the Fund’s constitution or the law that governs the Fund or applicable internal control procedures, or act fraudulently or dishonestly.

The non-compliance may expose the Fund to higher risks which may result in a fall in the value of the Fund which in turn may affect its investment goals. However, the risk can be mitigated by the internal controls and compliance monitoring undertaken by the Manager.



Shariah status reclassification risk

This risk refers to the risk that the currently held Shariah-compliant securities in the portfolio of Islamic funds may be reclassified as Shariah non-compliant in the periodic review of the securities by the Shariah Advisory Council of the Securities Commission or the Shariah Adviser. If this occurs, the Manager will take the necessary steps to dispose of such securities.

Opportunity loss could occur due to the restriction on the Fund to retain the excess capital gains derived from the disposal of the reclassified Shariah non-compliant securities. In such an event, the Fund is required:

i. to dispose such securities with immediate effect or within one (1) calendar month if the value of the securities exceeds or is equal to the investment cost on the effective date of Reclassification of the List of Shariah-compliant securities (“Reclassification”) by the SAC of the SC or the Shariah Adviser. The Fund is allowed to keep dividends received and capital gains from the disposal of the securities up to the effective date of Reclassification. However, any dividends received and excess capital gains from the disposal of the Shariah non-compliant securities after the effective date of Reclassification should be channelled to baitulmal and/or approved charitable bodies;

ii. to hold such securities if the value of the said securities is below the investment cost on the effective date of Reclassification until the total subsequent dividends received (if any) and the market price of the securities is equal to the cost of investment at which time disposal has to take place within one (1) calendar month, capital gains (if any) from the disposal of the securities should be channelled to baitulmal and/or approved charitable bodies; or

iii. to dispose such securities at a price lower than the investment cost which will result in a decrease in the Fund’s value.


Annual Report

Fund management risk

There is the risk that the management company may not adhere to the investment mandate of the respective Fund. With close monitoring by the investment committee, back office system being incorporated with limits and controls, and regular reporting to the senior management team, the management company is able to manage such risk. The Trustee has an oversight function over management of the Fund by the management company to safeguard the interests of unit holders.

Liquidity risk

Liquidity risk is the risk that the Fund will encounter difficulty in meeting its financial obligations. Generally, all investments are subject to a certain degree of liquidity risk depending on the nature of the investment instruments, market, sector and other factors. For the purpose of the Fund, the Manager will attempt to balance the entire portfolio by investing in a mix of assets with satisfactory trading volume and those that occasionally could encounter poor liquidity. This is expected to reduce the risks for the entire portfolio without limiting the Fund’s growth potentials.

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

the Trustee, to meet anticipated payments and cancellations of units by unit holders. Islamic liquid assets comprise bank balance, Islamic deposits with licensed financial institutions and other Shariah-compliant instruments which are capable of being converted into cash within 7 days.



The table below summarises the Fund’s financial liabilities into relevant maturity groupings based on the remaining period as at the statement of financial position date to the contractual maturity date. The amounts in the table are the contractual undiscounted cash flows.

Less than1 month

Between1 monthto 1 year Total

RM RM RM

2019

Amount due to Manager 372,258 - 372,258Accrued management fee 164,743 - 164,743Amount due to Trustee 9,226 - 9,226Other payables and accruals - 19,987 19,987Contractual cash outflows 546,227 19,987 566,214

2018

Amount due to Manager 136,988 - 136,988Accrued management fee 145,394 - 145,394Amount due to Trustee 8,142 - 8,142Amount due to brokers 544,116 - 544,116Distribution payable 173,057 - 173,057Other payables and accruals - 26,968 26,968Contractual cash outflows 1,007,697 26,968 1,034,665

Capital risk

The capital of the Fund is represented by equity consisting of unit holders’ capital of RM125,331,351 (2018: RM104,540,190) and retained earnings of RM35,645,709 (2018: RM39,971,665). The amount of equity 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 objective 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 benefits for other stakeholders and to maintain a strong capital base to support the development of the Shariah-compliant investment activities of the Fund.


Annual Report

Credit/Default risk

Credit risk refers to the ability of an issuer or a counter party to make timely payments of profit, principals and proceeds from realisation of Shariah-compliant investments. In the case of the Fund, both the Manager and the External Fund Manager regularly review the ratings assigned to the issuer so that the necessary steps can be taken if the ratings fall below those prescribed by the SC.

The credit risk arising from placements of Islamic deposits with licensed financial institutions is managed by ensuring that the Fund will only place Islamic deposits with reputable licensed financial institutions. For amount due from brokers, the settlement terms are governed by the relevant rules and regulations as prescribed by Bursa Malaysia Securities Berhad (“Bursa Malaysia”). The settlement terms of the proceeds from the creation of units receivable from the Manager are governed by the SC’s Guidelines on Unit Trust Funds.

The credit/default risk is minimal as all transactions in quoted Shariah-compliant securities are settled/paid upon delivery using approved brokers.

The Fund seeks to mitigate credit/default risk by investing in high quality sukuk.



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Annual Report

Fin

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Fair value estimation

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e. an exit price).

The fair value of financial assets traded in active market (such as trading Shariah-compliant securities) are based on quoted market prices at the close of trading on the year end date. The Fund utilises the last traded market price for financial assets where the last traded price falls within the bid-ask spread. In circumstances where the last traded price is not within the bid-ask spread, the Manager will determine the point within the bid-ask spread that is representative of the fair value.

An active market is a market in which transactions for the asset take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

The fair value of financial assets that are not traded in an active market is determined

by using valuation techniques.

Fair value hierarchy

i. The table below analyses financial instruments carried at fair value by valuation method. The different levels have been defined as follows:

• Level 1: Quoted prices (unadjusted) in active market for identical assets or liabilities.

• Level 2: 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 3: Inputs for the asset and liability that are not based on observable market data (that is, unobservable inputs).


Annual Report

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 by the Fund. The Fund 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.

The following table analyses within the fair value hierarchy the Fund’s financial assets (by class) measured at fair value:

Level 1 Level 2 Level 3 Total

RM RM RM RM

2019

Financial assets at fair value through profit or loss:

Quoted Shariah- compliant securities 130,314,400 - - 130,314,400 Sukuk - 13,408,105 - 13,408,105

2018

Financial assets at fair value through

profit or loss: Quoted Shariah- compliant securities 111,884,816 - - 111,884,816 Sukuk - 2,532,418 - 2,532,418



Investments whose values are based on quoted market prices in active markets, and are therefore classified within Level 1, include active listed Shariah-compliant securities. The Fund does not adjust the quoted prices for these instruments. The Fund’s policies on valuation of these financial assets are stated in Note F to the financial statements.

Financial instruments that trade in markets that are considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs are classified within Level 2, which include sukuk. As Level 2 instruments include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability which are generally based on available market information. The Fund’s policies on valuation of these financial assets are stated in Note F to the financial statements.

The carrying value of cash and cash equivalents, amount due from Manager, amount due from brokers, dividends receivable and all liabilities are a reasonable approximation of their fair values due to their short term nature.

3. MANAGEMENT FEE

In accordance with the Deed, the Manager is entitled to a management fee at a rate not exceeding 3.00% per annum on the net asset value of the Fund calculated on daily basis.

For the financial year ended 30 September 2019, the management fee is recognised at a rate of 1.25% (2018: 1.25%) per annum on the net asset value of the Fund, calculated on daily basis.

There will be no further liability to the Manager in respect of the management fee other than the amounts recognised above.


Annual Report

4. TRUSTEE FEE

In accordance with the Deed, the Trustee is entitled to an annual fee at a rate not exceeding 0.20% per annum on the net asset value of the Fund, subject to a minimum fee of RM18,000 per annum.

For the financial year ended 30 September 2019, the Trustee fee is recognised at a rate of 0.07% (2018: 0.07%) subject to a minimum of RM18,000 per annum on the net asset value of the Fund, calculated on daily basis.

There will be no further liability to the Trustee in respect of the trustee fee other than the amounts recognised above.



5. DISTRIBUTION

2019 2018

RM RM

Distribution to unit holders are from the following sources:

Distribution equalisation (Memorandum account) 4,637,225 3,693,462

Prior financial years’ realised income 3,729,446 3,811,629

Gross realised income 8,366,671 7,505,091Less: Expenses (1,111,499) (955,402)

7,255,172 6,549,689

Gross distribution per unit (sen) 4.35 4.69

Net distribution per unit (sen) 4.35 4.69

Ex-date 18 September 2019 26 September 2018

Gross distribution is derived using total income less total expenses. The distribution is made from prior years’ realised income.

Gross distribution per unit is derived from gross realised income less expenses divided by the number of units in circulation, while net distribution per unit is derived from gross realised income less expenses and taxation divided by the number of units in circulation.

Distribution equalisation represents the average amount of distributable income included in the creation and cancellation prices of units. It is computed as at each date of creation and cancellation of units. For the purposes of determining amount available for distribution, income equalisation is included in the computation of realised gain or income available for distribution.

There are unrealised losses of RM2,191,055 (2018: unrealised gains of RM6,790,472) arising during the financial year.


Annual Report

6. TAXATION

2019 2018

RM RM

Tax charged for the financial year: Current taxation - local - 2,078 Underprovision of taxation in previous year 1,730 -

1,730 2,078

The numerical reconciliation between (loss)/profit before taxation multiplied by the Malaysian statutory tax rate and tax expense of the Fund is as follows:

2019 2018

RM RM

(Loss)/profit before taxation (1,704,954) 9,964,648

Tax at Malaysian statutory rate of 24% (2018: 24%) (409,189) 2,391,516

Tax effects of: Shariah-compliant investment income exempt from tax (183,293) (2,932,310) Expenses not deductible for tax purposes 110,984 152,857 Restriction on tax deductible expenses for Unit Trust Funds 481,498 387,937 Income subject to different tax rate - 2,078 Underprovision of taxation in previous year 1,730 -

Taxation 1,730 2,078



7. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

2019 2018

RM RM

Designated at fair value through profit or loss: Quoted Shariah-compliant securities (Note 7(i)) 130,314,400 111,884,816 Sukuk (Note 7(ii)) 13,408,105 2,532,418

143,722,505 114,417,234

Net (loss)/gain on financial assets at fair value through profit or loss: Realised (loss)/gain on disposals (1,150,968) 1,930,347 Change in unrealised fair value (loss)/gain (2,182,446) 6,790,472

(3,333,414) 8,720,819


Annual Report

i. Quoted Shariah-compliant securities

Name of counter QuantityAggregate

cost

Fair value as at

30.9.2019

Percentage of net asset

value of the Fund

Units RM RM %

ConstructionEconpile Holdings Berhad 639,200 418,897 441,048 0.27 Gabungan AQRS Berhad 3,118,446 3,985,369 3,898,058 2.42Kerjaya Prospek Group

Berhad 1,768,580 3,040,807 2,369,897 1.47MGB Berhad 1,358,000 1,765,979 882,700 0.55Muhibbah Engineering

(M) Berhad 672,800 1,874,788 1,621,448 1.017,557,026 11,085,840 9,213,151 5.72

Consumer Products and Services

Ajinomoto (Malaysia) Berhad 46,700 831,237 778,022 0.48

Bermaz Auto Berhad 1,467,440 2,812,027 3,345,763 2.08DRB-HICOM Berhad 983,500 2,113,725 2,330,895 1.45Dutch Lady Milk

Industries Berhad 24,900 1,561,986 1,494,000 0.93Nestle (Malaysia) Berhad 52,700 4,250,094 7,678,390 4.77QL Resources Berhad 470,379 928,703 3,391,433 2.11Sime Darby Berhad 672,900 1,714,348 1,514,025 0.94

3,718,519 14,212,120 20,532,528 12.76 EnergyDialog Group Berhad 1,903,400 4,316,608 6,471,560 4.02Sapura Energy Berhad 4,342,900 2,138,366 1,216,012 0.76Serba Dinamik Holdings

Berhad 845,900 3,123,670 3,595,075 2.237,092,200 9,578,644 11,282,647 7.01



i. Quoted Shariah-compliant securities (continued)


cost

Fair value as at

30.9.2019


value of the Fund

Units RM RM %

Financial ServicesBIMB Holdings Berhad 841,900 3,549,531 3,333,924 2.07Bursa Malaysia Berhad 328,900 2,168,412 2,006,290 1.25Syarikat Takaful Malaysia

Keluarga Berhad 802,700 2,205,501 4,735,930 2.941,973,500 7,923,444 10,076,144 6.26

Health CareHartalega Holdings

Berhad 622,800 2,728,994 3,269,700 2.03IHH Healthcare Berhad 597,400 3,399,890 3,393,232 2.11Kossan Rubber Industries

Berhad 494,200 1,614,305 2,115,176 1.31KPJ Healthcare Berhad 1,520,500 1,533,062 1,345,643 0.84Top Glove Corporation

Berhad 493,500 2,768,384 2,196,075 1.363,728,400 12,044,635 12,319,826 7.65


Annual Report



cost

Fair value as at

30.9.2019


value of the Fund

Units RM RM %

Industrial Products and Services

ATA IMS Berhad 1,488,900 2,478,553 1,980,237 1.23Cahya Mata Sarawak

Berhad 643,900 2,041,599 1,738,530 1.08Cypark Resources Berhad 565,300 857,746 768,808 0.48HSS Engineers Berhad 1,789,100 1,746,854 1,377,607 0.86Pestech International

Berhad 1,171,400 1,504,926 1,405,680 0.87Petronas Chemicals

Group Berhad 535,500 4,383,647 4,037,670 2.51Scientex Berhad 331,900 1,748,025 2,967,186 1.84SKP Resources Berhad 664,700 848,897 744,464 0.46Uchi Technologies Berhad 1,229,500 2,930,813 3,454,895 2.15

8,420,200 18,541,060 18,475,077 11.48

PlantationKuala Lumpur Kepong

Berhad 69,300 1,616,713 1,599,444 0.99Sime Darby Plantation

Berhad 430,965 2,421,916 2,038,464 1.27500,265 4,038,629 3,637,908 2.26





cost

Fair value as at

30.9.2019


value of the Fund

Units RM RM %

PropertyIOI Properties Group

Berhad 1,345,300 1,671,920 1,533,642 0.95Malaysian Resources

Corporation Berhad 2,180,400 1,644,240 1,602,594 1.00S P Setia Berhad 1,144,238 2,780,617 1,556,164 0.97Sime Darby Property

Berhad 1,224,165 1,818,516 1,028,299 0.645,894,103 7,915,293 5,720,699 3.56

Islamic REITKLCC Property Holding

Berhad 212,700 1,658,547 1,716,489 1.07

TechnologyInari Amertron Berhad 2,191,004 3,314,103 3,987,627 2.48Pentamaster Corporation

Berhad 1,194,000 2,192,748 5,301,360 3.29Vitrox Corporation

Berhad 605,000 1,361,150 4,549,600 2.833,990,004 6,868,001 13,838,587 8.60


Annual Report



cost

Fair value as at

30.9.2019


value of the Fund

Units RM RM %

Telecommunications and Media

Axiata Group Berhad 549,438 2,348,117 2,362,583 1.47Digi.Com Berhad 128,900 640,327 612,275 0.38Telekom Malaysia Berhad 704,900 2,365,003 2,537,640 1.58TIME dotCom Berhad 419,000 3,417,061 3,825,470 2.38

1,802,238 8,770,508 9,337,968 5.81

Transportation and Logistics

Lingkaran Trans Kota Holdings Berhad 326,300 1,521,943 1,471,613 0.91

UtilitiesPetronas Gas Berhad 137,800 2,298,307 2,257,164 1.40 Tenaga Nasional Berhad 765,000 10,544,884 10,434,599 6.48

902,800 12,843,191 12,691,763 7.88





cost

Fair value as at

30.9.2019


value of the Fund

Units RM RM %

TOTAL QUOTED SHARIAH-COMPLIANT SECURITIES 46,118,255 117,001,855 130,314,400 80.97

ACCUMULATED UNREALISED GAIN ON FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 13,312,545

FAIR VALUE OF FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 130,314,400


Annual Report

i. Quoted Shariah-compliant securities


cost

Fair value as at

30.9.2018


value of the Fund

Units RM RM %

ConstructionAdvancecon Holdings

Berhad 2,398,800 2,571,904 959,520 0.66Gabungan AQRS Berhad 1,057,300 1,810,169 1,173,603 0.81Gabungan AQRS Berhad

- Warrant 264,325 - - -Gamuda Berhad 383,300 1,663,421 1,287,888 0.89Kerjaya Prospek Group

Berhad 1,768,580 3,040,807 2,476,012 1.71Kerjaya Prospek Group

Berhad - Warrant 241,170 - 57,881 0.04MGB Berhad 1,358,000 1,765,979 1,174,670 0.81

7,471,475 10,852,280 7,129,574 4.92

Consumer Products and Services

Bermaz Auto Berhad 1,205,640 2,314,607 2,543,900 1.76DRB-HICOM Berhad 605,700 1,396,320 1,314,369 0.91Dutch Lady Milk

Industries Berhad 22,400 1,439,740 1,439,872 1.00Fraser & Neave Holdings

Berhad 68,800 2,387,433 2,595,136 1.80Nestle (Malaysia) Berhad 52,700 4,250,094 7,715,280 5.34Padini Holding Berhad 259,500 1,368,813 1,525,860 1.06QL Resources Berhad 470,379 928,703 3,212,689 2.22Sime Darby Berhad 338,200 914,180 882,702 0.61

3,023,319 14,999,890 21,229,808 14.70





cost

Fair value as at

30.9.2018


value of the Fund

Units RM RM %

EnergyDialog Group Berhad 1,935,000 3,987,202 6,753,150 4.67Sapura Energy Berhad 2,224,200 1,365,041 911,922 0.63Serba Dinamik Holdings

Berhad 679,500 2,336,575 2,588,895 1.794,838,700 7,688,818 10,253,967 7.09

FinanceBIMB Holdings Berhad 437,700 1,758,464 1,658,883 1.15Syarikat Takaful Malaysia

Keluarga Berhad 802,700 2,205,501 3,050,260 2.111,240,400 3,963,965 4,709,143 3.26

Health CareHartalega Holdings

Berhad 443,800 1,771,259 2,937,956 2.03Kossan Rubber Industries

Berhad 494,200 1,614,305 2,120,118 1.47938,000 3,385,564 5,058,074 3.50


Annual Report



cost

Fair value as at

30.9.2018


value of the Fund

Units RM RM %

Industrial Products and Services

Cahya Mata Sarawak Berhad 1,132,700 3,591,427 3,307,484 2.29

Cypark Resources Berhad 366,800 836,304 880,320 0.61Denko Industrial

Corporation Berhad 363,600 563,580 596,304 0.41HSS Engineers Berhad 718,400 715,449 675,296 0.47Pestech International

Berhad 1,171,400 1,504,926 1,757,100 1.22Petronas Chemicals

Group Berhad 618,300 4,995,623 5,787,287 4.00Press Metal Aluminium

Holdings Berhad 541,600 2,780,498 2,632,176 1.82Prestar Resources Berhad 1,764,800 2,276,777 1,305,952 0.90Scientex Berhad 331,900 1,748,025 2,947,272 2.04Uchi Technologies Berhad 651,600 1,457,000 2,013,444 1.39

7,661,100 20,469,609 21,902,635 15.15





cost

Fair value as at

30.9.2018


value of the Fund

Units RM RM %

PlantationIOI Corporation Berhad 370,900 1,647,643 1,683,886 1.17Kuala Lumpur Kepong

Berhad 23,400 553,199 584,064 0.40Sime Darby Plantation

Berhad 603,465 3,391,323 3,198,365 2.21997,765 5,592,165 5,466,315 3.78

PropertyMalaysian Resources

Corporation Berhad 1,845,900 1,422,935 1,329,048 0.92S P Setia Berhad 403,935 1,235,778 1,090,625 0.75Sime Darby Property

Berhad 1,200,765 1,795,233 1,416,903 0.983,450,600 4,453,946 3,836,576 2.65

TechnologyInari Amertron Berhad 1,598,804 2,331,051 3,645,273 2.52MY E.G. Services Berhad 1,024,200 1,460,288 1,792,350 1.24Pentamaster Corporation

Berhad 1,045,200 2,534,599 3,867,240 2.68Vitrox Corporation

Berhad 605,000 1,361,150 4,840,000 3.354,273,204 7,687,088 14,144,863 9.79

Telecommunications and Media

Axiata Group Berhad 290,438 1,308,822 1,324,397 0.92TIME dotCom Berhad 333,800 2,761,021 2,767,202 1.91

624,238 4,069,843 4,091,599 2.83


Annual Report



cost

Fair value as at

30.9.2018


value of the Fund

Units RM RM %

Transportation and Logistics

Lingkaran Trans Kota Holdings Berhad 306,900 1,435,862 1,399,464 0.97

MMC Corporation Berhad 622,200 991,719 852,414 0.59

929,100 2,427,581 2,251,878 1.56

UtilitiesMega First Corporation

Berhad 261,600 880,302 889,440 0.62Tenaga Nasional Berhad 706,400 9,803,334 10,920,944 7.56

968,000 10,683,636 11,810,384 8.18

TOTAL QUOTED SHARIAH-COMPLIANT SECURITIES 36,415,901 96,274,385 111,884,816 77.41

ACCUMULATED UNREALISED GAIN ON FINANCIAL ASSETS

AT FAIR VALUE THROUGH PROFIT OR LOSS 15,610,431

FAIR VALUE OF FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 111,884,816



ii. Sukuk

Name of counterNominal

valueAggregate

cost

Fair value as at

30.9.2019


value of the Fund

RM RM RM %

5.05% Affin Islamic Bank Berhad

23.10.2028 (A1) 5,000,000 5,142,231 5,300,772 3.294.62% Benih Restu

Berhad 05.06.2025 (AA2 (S)) 3,000,000 3,139,048 3,154,628 1.963.75% Kuala Lumpur

Kepong Berhad 27.09.2029

(AA1) 5,000,000 5,002,055 4,952,705 3.08

TOTAL SUKUK 13,000,000 13,283,334 13,408,105 8.33

ACCUMULATED UNREALISED

GAIN ON FINANCIAL ASSETS AT FAIR

VALUE THROUGH PROFIT OR LOSS 124,771

FAIR VALUE OF FINANCIAL ASSETS

AT FAIR VALUE THROUGH PROFIT OR

LOSS 13,408,105


Annual Report

ii. Sukuk

Name of counterNominal

valueAggregate

cost

Fair value as at

30.9.2018


value of the Fund

RM RM RM %

3.91% Government of Malaysia

13.08.2019 (NR) 1,500,000 1,507,047 1,514,980 1.054.80% Hong Leong

Islamic Bank Berhad 17.06.2019 (AA1) 1,000,000 1,016,040 1,017,438 0.70

TOTAL SUKUK 2,500,000 2,523,087 2,532,418 1.75

ACCUMULATED UNREALISED

GAIN ON FINANCIAL ASSETS AT FAIR

VALUE THROUGH PROFIT OR LOSS 9,331

FAIR VALUE OF FINANCIAL ASSETS

AT FAIR VALUE THROUGH PROFIT OR

LOSS 2,532,418

The effective weighted average rate of return of sukuk per annum as at the date of the statement of financial position are as follows:

2019 2018

% %

Sukuk 4.15 3.67



8. CASH AND CASH EQUIVALENTS

2019 2018

RM RM

Bank balance with a licensed bank 65,654 94,912Islamic deposit with a licensed financial institution 16,141,304 29,267,822

16,206,958 29,362,734

The effective weighted average rate of return of Islamic deposit with a licensed financial institution per annum as at the date of the statement of financial position are as follows:

2019 2018

% %

Islamic deposit with a licensed financial institution 2.95 3.26

The Islamic deposits have an average maturity of 1 day (2018: 1 day).

9. SHARIAH INFORMATION OF THE FUND The Shariah Adviser confirmed that the investment portfolio of the Fund is Shariah-compliant, which comprises:

a. Securities listed on Bursa Malaysia Securities Berhad which have been classified as Shariah-compliant by the Shariah Advisory Council of the Securities Commission Malaysia;

b. Sukuk as per the list of sukuk available at Bond Info Hub and Fully Automated System for Issuing/Tendering of Bank Negara Malaysia; and

c. Liquid assets in local market which are placed in Shariah-compliant instruments.


Annual Report

10. UNITS IN CIRCULATION

2019 2018

No. of Units No. of Units

At the beginning of the financial year 146,616,820 121,881,294Creation of units during the financial year: Arising from applications 60,996,072 57,611,257 Arising from distribution 7,684,350 6,474,394Cancellation of units during the financial year (40,952,123) (39,350,125)

At the end of the financial year 174,345,119 146,616,820

11. MANAGEMENT EXPENSE RATIO (“MER”)

2019 2018

% %

MER 1.34 1.41

MER is derived from the following calculation:

MER = (A + B + C + D + E)X 100

F

A = Management fee

B = Trustee fee

C = Audit fee

D = Tax agent fee

E = Other expenses (excluding transaction cost)

F = Average net asset value of the Fund calculated on a daily basis

The average net asset value of the Fund for the financial year calculated on a daily basis is RM158,985,520 (2018: RM126,960,295).



12. PORTFOLIO TURNOVER RATIO (“PTR”)

2019 2018

PTR (times) 0.45 0.58

PTR is derived from the following calculation:

(Total acquisitions for the financial year + total disposals for the financial year) ÷ 2Average net asset value of the Fund for the financial year calculated on a daily basis

where: total acquisitions for the financial year = RM88,934,347 (2018: RM80,310,845) total disposals for the financial year = RM53,922,607 (2018: RM66,778,150)


Annual Report

13. TRANSACTIONS WITH BROKERS/DEALERS

Details of transactions with the top 10 brokers and dealers are as follows:

Name of brokers/ dealers

Valueof trades

Percentage of total trades

Brokerage fees

Percentage of total

brokerage fees

RM % RM %

2019CLSA Securities Malaysia

Sdn Bhd 20,611,905 14.43 42,202 15.43CGS-CIMB Securities Sdn Bhd 16,881,036 11.82 34,655 12.67Maybank Investment Bank

Berhad 16,579,299 11.61 33,655 12.31UOB Kay Hian Securities

(M) Sdn Bhd 13,601,287 9.52 28,046 10.26RHB Investment Bank

Berhad 12,577,489 8.80 26,241 9.60Affin Hwang Investment

Bank Berhad 10,833,358 7.58 22,321 8.16KAF-Seagroatt &

Campbell Securities Sdn Bhd 8,397,381 5.88 17,116 6.26Credit Suisse Securities

(Malaysia) Sdn Bhd 6,471,139 4.53 13,255 4.85Macquarie Capital

Securities (Malaysia) Sdn Bhd 6,403,255 4.48 13,452 4.92Hong Leong Bank Berhad 5,035,500 3.52 - - Others 25,464,620 17.83 42,509 15.54

142,856,269 100.00 273,452 100.00



Name of brokers/dealers

Valueof trades

Percentage of total trades

Brokerage fees

Percentage of total

brokerage fees

RM % RM %

2018Maybank Investment Bank

Berhad 23,368,932 16.36 57,384 16.16Affin Hwang Investment

Bank Berhad 17,142,905 12.00 40,308 11.35RHB Investment Bank

Berhad 16,283,768 11.40 40,576 11.43CIMB Investment Bank

Berhad 14,767,500 10.34 38,941 10.97UOB Kay Hian Securities

(M) Sdn Bhd 13,213,935 9.25 32,705 9.21CLSA Securities Malaysia

Sdn Bhd 10,418,606 7.29 25,688 7.24KAF-Seagroatt &

Campbell Securities Sdn Bhd 9,653,342 6.76 24,139 6.80Kenanga Investment Bank

Berhad 9,386,077 6.57 24,549 6.91Hong Leong Investment

Bank Berhad 8,713,104 6.10 21,783 6.14Credit Suisse Securities

(Malaysia) Sdn Bhd 7,609,178 5.33 18,194 5.12Others 12,305,517 8.60 30,764 8.67

142,862,864 100.00 355,031 100.00

All brokers and dealers highlighted above are not related to the Manager.


Annual Report

14. UNITS HELD BY THE MANAGER

The related party of and its relationship with the Fund are as follows:

Related party Relationship

Eastspring Investments Berhad The Manager

2019 2018

No. of units RM No. of units RM

Eastspring Investments Berhad 1,496 1,382 1,429 1,408

The above units were transacted at the prevailing market price.

The units are held legally by the Manager and are within the prescribed limit allowed by SC’s Guidelines on Unit Trust Funds. Other than the above, there were no units held by the Directors or parties related to the Manager.

15. SEGMENTAL INFORMATION The internal reporting provided to the chief operating decision-maker for the

Fund’s assets, liabilities and 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.

The reportable operating segments derive their income by seeking Shariah-compliant investments to achieve targeted returns consummate with an acceptable level of risk within each portfolio. These returns consist of profit income, dividend income and gains on the appreciation in the value of Shariah-compliant investments, and is derived from quoted Shariah-compliant securities listed on the Bursa Malaysia Securities Berhad and sukuk traded in Malaysia.



16. MFRS 9 FINANCIAL INSTRUMENTS

As disclosed in Note A, the Fund has adopted MFRS 9, which resulted in changes to the accounting policies and adjustments to the financial position. The main changes are as follows.

a. Classification and measurement of financial assets

Up to 30 September 2018, financial assets were classified in the following categories: financial assets at fair value through profit or loss (“FVTPL”) and receivables. Note F sets out the details of accounting policies for classification and measurement of financial instruments under MFRS 139.

From 1 October 2018, the Fund has applied the following MFRS 9’s classification approach to all types of financial assets:

• Investments in equity instruments: These instruments are always measured at fair value with changes in fair value presented in profit or loss unless the Fund has made an irrevocable choice to present changes in fair value in other comprehensive income (“OCI”) for investments that are not held for trading.

• Investments in sukuk: There are 3 subsequent measurement categories amortised cost, fair value with changes either recognised through other comprehensive income (“FVOCI”) or through profit or loss (“FVTPL”).

b. Impairment

From 1 October 2018 onwards, the Fund measures credit risk and expected credit losses using probability of default, exposure at default and loss given default. Management considers both historical analysis and forward looking information in determining any expected credit loss. Management consider the probability of default to be close to zero as these instruments have a low risk of default and the counterparties have a strong capacity to meet their contractual obligations in the near term. As a result, no loss allowance has been recognised based on 12 months expected credit losses as any such impairment would be wholly insignificant to the Fund.


Annual Report

Significant increase in credit risk

A significant increase in credit risk is defined by management as any contractual payment which is more than 30 days past due.

Definition of default and credit-impaired financial assets


As disclosed above, the adoption of MFRS 9 in 2018 resulted in reclassification and change in measurement of certain financial assets and financial liabilities.



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Annual Report

CORPORATE DIRECTORY

THE MANAGERNAME

EASTSPRING INVESTMENTS BERHAD

COMPANY NO.

200001028634 (531241-U)

REGISTERED OFFICE

Level 25, Menara Hong Leong

No. 6, Jalan Damanlela

Bukit Damansara

50490 Kuala Lumpur

BUSINESS OFFICE

Level 22, Menara Prudential

Persiaran TRX Barat

55188 Tun Razak Exchange

Kuala Lumpur

TELEPHONE NO.

603-2778 3888

FAX NO.

603-2789 7220

EMAIL

[email protected]

WEBSITE

www.eastspring.com/my

TRUSTEENAME

DEUTSCHE TRUSTEES MALAYSIA BERHAD

COMPANY NO.

763590-H

REGISTERED OFFICE & BUSINESS OFFICE

Level 20, Menara IMC

No. 8, Jalan Sultan Ismail

50250 Kuala Lumpur

TELEPHONE NO.

603-2053 7522

FAX NO.

603-2053 7526

SHARIAH ADVISERNAME

BIMB SECURITIES SDN BHD

COMPANY NO.

290163-X

REGISTERED ADDRESS& BUSINESS ADDRESS

Level 32, Menara Multi Purpose

Capital Square

No. 8, Jalan Munshi Abdullah

50100 Kuala Lumpur

TELEPHONE NO.

603-2613 1600

FAX NO.

603-2613 1799

EMAIL

[email protected]

WEBSITE

www.bimbsec.com.my



SALE & PURCHASE OF UNITSEastspring Investments BerhadLevel 22, Menara Prudential

Persiaran TRX Barat

55188 Tun Razak Exchange

Kuala Lumpur

TELEPHONE NO.

603-2778 1000

BRANCHESPetaling JayaEastspring Investments Berhad

A-17-P1 & M

Block A, Jaya One

72A, Jalan Universiti

46200 Petaling Jaya, Selangor

TELEPHONE NO.

603-7948 1288

Kota KinabaluEastspring Investments Berhad

Suite E3, 9th Floor

CPS Tower, Centre Point Sabah

No. 1, Jalan Centre Point

88000 Kota Kinabalu, Sabah

TELEPHONE NO.

6088-238 613

ENQUIRIESCLIENT SERVICES

603-2778 1000

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

ANNUAL REPORT

EASTSPRING INVESTMENTSDANA DINAMIK

Eastspring Investments Berhad 200001028634 (531241-U)

Level 22, Menara Prudential, Persiaran TRX Barat55188 Tun Razak Exchange, Kuala LumpurT: (603) 2778 3888 F: (603) 2789 7220eastspring.com/my

Client ServicesT: (603) 2778 1000 [email protected]

aa rr t - eastspring.com · () the performance of the fund against the benchmark is published in...

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