annual report for namaa’ asia-pacific equity growth...and that unit prices and investment returns...

Annual Report for

31 October 2017

Namaa’ Asia-Pacific EquityGrowth

Namaa’ Asia-Pacific Equity Growth

TRUST DIRECTORY

Manager

AmFunds Management Berhad

9th

& 10th

Floor, Bangunan AmBank Group

55 Jalan Raja Chulan

50200 Kuala Lumpur

Board of Directors

Raja Maimunah Raja Abdul Aziz

Dato’ Mustafa Mohd Nor

Tai Terk Lin

Goh Wee Peng

Sum Leng Kuang

Investment Committee

Sum Leng Kuang

Tai Terk Lin

Dato’ Mustafa Mohd Nor

Zainal Abidin Mohd Kassim

Goh Wee Peng

Investment Manager

AmIslamic Funds Management Sdn Bhd

Shariah Adviser

Al Rajhi Banking & Investment Corporation (Malaysia) Berhad

Trustee

Deutsche Trustees Malaysia Berhad

Auditors and Reporting Accountants

Ernst & Young

Taxation Adviser

Deloitte Tax Services Sdn Bhd


CONTENTS

1 Manager’s Report

10 Independent Auditor’s Report to the Unitholders

13 Statement of Financial Position

14 Statement of Comprehensive Income

15 Statement of Changes in Equity

16 Statement of Cash Flows

17 Notes to the Financial Statements

34 Statement by the Manager

35 Trustee’s Report

36 Report of the Shariah Adviser to the Unitholders

37 Directory

1

MANAGER’S REPORT

Dear Unitholders,

We are pleased to present you the Manager’s Report and the audited accounts of Namaa’ Asia-Pacific

Equity Growth (“Fund”) for the financial year ended 31 October 2017.

Salient Information of the Fund

Name Namaa’ Asia-Pacific Equity Growth (“Fund”)

Category/Type

Feeder Fund (Shariah-compliant Equity) / Growth

Name of

Target Fund

Am-Namaa’ Asia-Pacific Equity Growth

Objective The Fund seeks to grow the value of investment in the Longer term by investing in

Shariah-compliant listed equities and equities related investments and other

Islamic instruments that conforms to the Shariah Investment Guidelines across

Asia Pacific (ex-Japan) region.

Duration The Fund was established on 5 June 2008 and shall exist for as long as it appears

to the Manager and the Trustee that it is in the interest of the unitholders for it to

continue. In some circumstances, the unitholders can resolve at a meeting to

terminate the Fund.

Performance

Benchmark

Dow Jones Islamic Market Index Asia-Pacific (ex-Japan).

(obtainable from www.aminvest.com)

Note: The risk profile of the Fund is not the same as the risk profile of the

performance benchmark.

Income

Distribution

Policy

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

Note: Income distributed will be automatically reinvested at no cost, based on the

NAV per unit at the end of the Business Day of the income distribution date.

Breakdown of

Unit Holdings

by Size

For the financial year under review, the size of the Fund stood at 9,182,417 units.

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

No of units

held

Number of

unitholders

No of units

held

Number of

unitholders

5,000 and below 109,736 49 112,180 54

5,001-10,000 304,736 43 327,186 43

10,001-50,000 1,784,697 79 2,605,329 104

50,001-500,000 5,422,270 47 13,831,903 92

500,001 and above 1,560,978 2 1,760,861 3

http://www.aminvest.com/

2

Fund Performance Data

Portfolio

Composition

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

October are as follows:

FY

2017

%

FY

2016

%

FY

2015

%

Foreign collective investment scheme 96.94 96.68 97.29

Cash and others 3.06 3.32 2.71

Total 100.00 100.00 100.00

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

value.

Performance

Details

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

follows:

FY

2017

FY

2016

FY

2015

Net asset value (RM)* 7,085,943 12,370,880 1,088,335

Units in circulation* 9,182,417 18,637,459 1,533,142

Net asset value per unit (RM)* 0.7717 0.6638 0.7099

Highest net asset value per unit (RM)* 0.7759 0.7231 0.7342

Lowest net asset value per unit (RM)* 0.6564 0.6048 0.6196

Benchmark performance (%) 27.60 3.60 18.15

Total return (%)(1)

16.25 -6.49 14.04

- Capital growth (%) 16.25 -6.49 14.04

- Income distribution (%) - - -

Gross distribution (sen per unit) - - -

Net distribution (sen per unit) - - -

Management expense ratio (%)(2)

0.26 0.41 1.25

Portfolio turnover ratio (times)(3)

0.96 1.24 0.32

* Above prices and net asset value per unit are not shown as ex-distribution.

Note:

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

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

(2) Management expense ratio (“MER”) is calculated based on the total fees and

expenses incurred by the Fund divided by the average fund size calculated on a

daily basis. The MER decreased by 0.15% as compared to 0.41% per annum

for the financial year ended 31 October 2016 mainly due to increase in average

fund size.

(3) Portfolio turnover ratio (“PTR”) is calculated based on the average of the total

acquisitions and total disposals of investment securities of the Fund divided by

the average fund size calculated on a daily basis. The PTR decreased by 0.28

times (22.6%) as compared to 1.24 times for the financial year ended 31

October 2016 mainly due to increase in average fund size.

3

Average Total Return (as at 31 October 2017)

Namaa’

Asia-Pacific

Equity Growth(a)

%

DJIM AP

(ex-Japan)(b)

%

One year 16.25 27.60

Three years 7.42 16.01

Five years 4.29 13.26

Since launch (15 August 2008) 4.82 7.08

Annual Total Return

Financial Years Ended

(31 October)

Namaa’

Asia-Pacific

Equity Growth(a)

%

DJIM AP

(ex-Japan)(b)

%

2017 16.25 27.60

2016 -6.49 3.60

2015 14.04 18.15

2014 -1.98 7.91

2013 1.55 10.60

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

(b) Dow Jones Islamic Market Index (“DJIM”) Asia-Pacific (ex-Japan)

(Obtainable from: www.aminvest.com).

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

Fund. Average total return of the Fund and its benchmark for a period is computed

based on the absolute return for that period annualised over one year.

Note: Past performance is not necessarily indicative of future performance

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

Fund

Performance

For the financial year under review, the Fund’s net asset value (“NAV”) decreased

by 42.7% to RM7,085,943 as at 31 October 2017 from RM12,370,880 as at 31

October 2016. Units in circulation as at the end of financial year under review

were 9,182,417 units, which was 50.7% lower as compared with 18,637,459 units

as at 31 October 2016. The Fund’s NAV per unit increased from RM0.6638 as at

31 October 2016 to RM0.7717 as at 31 October 2017, a rise of 16.3%.

For the financial year under review, the Fund registered a return of 16.25% which

was entirely capital in nature. Comparatively, for the same financial year, the

benchmark, Dow Jones Islamic Market Index (DJIM) Asia Pacific (ex-Japan)

registered a return of 27.60%. As such the Fund has underperformed the

benchmark by 11.35%.

The line chart below shows comparison between the annual performances of

Namaa’ Asia-Pacific Equity Growth and its benchmark, DJIM AP ex-Japan Index,

for the financial years ended 31 October.

http://www.aminvest.com.my/

4

Note: Past performance is not necessarily indicative of future performance and

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

Performance

of the Target

Fund

Fund Performance Review of the Target Fund – Am-Namaa’ Asia-Pacific

Equity Growth (“the Target Fund”)

The Target Fund’s net asset value was US$17.516 million as at 31 October 2017,

9.17% higher as compared to US$16.045 million as at 31 October 2016. The Fund

Target Fund’s net asset value (“NAV”) per unit increased by 19.35% to

US$16.4353 as at 31 October 2017 from US$13.7711 as at 31 October 2016.

The Target Fund registered a return of 19.35% for the financial year ended 31

October 2017, which was entirely capital growth in nature. Comparatively, for the

same year, the benchmark, Dow Jones Islamic Market Index Asia Pacific ex-Japan

registered a return of 26.57%. As such the Target Fund underperformed the

benchmark by 7.22%.

Has the Fund

achieved its

objective?

The Fund seeks to grow the value of investment in the Longer term by investing in

Shariah-compliant listed equities and equities related investments and other Islamic

instruments that conform to the Shariah Investment Guidelines across Asia Pacific

(ex-Japan) region. Over the 5 year period, the Fund achieved an average total return

of 4.29%.

Strategies and

Policies

Employed

For the financial year under review, the Fund invested 96.94% of the Fund’s net

asset value in the Target Fund, Am-Namaa’ Asia-Pacific Equity Growth. The

Target Fund is a Malaysian based fund and is denominated in USD.

Portfolio

Structure

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

review.

5

As at

31-10-2017

%

As at

31-10-2016

%

Changes

%

Foreign collective investment scheme 96.94 96.68 0.26

Cash and others 3.06 3.32 -0.26

Total 100.00 100.00

For the financial year under review, the exposure of the Fund in the foreign

collective investment scheme was at 96.94% as at 31 October 2017 as compared to

96.68% as at 31 October 2016.

Distribution/

Unit Splits

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

under review.

State of

Affairs

There have been neither significant change to the state of affairs of the Fund nor

any circumstances that materially affect any interests of the unitholders during the

financial year under review.

Rebates

and Soft

Commission

It is our policy to pay all rebates to the Fund. Soft commission received from

brokers/dealers are retained by the Manager only if the goods and services provided

are of demonstrable benefit to unitholders of the Fund.

During the financial year under review, the Manager had received on behalf of the

Fund, soft commissions in the form of fundamental database, financial wire

services, technical analysis software and stock quotation system incidental to

investment management of the Fund. These soft commissions received by the

Manager are deem to be beneficial to the unitholders of the Fund.

Market

Review

The surprise victory of Donald trump in the presidential election saw the market

going through a wild ride, with S&P 500 futures being halted trading after dropping

5%, while Nasdaq 100 futures lost 5.1% and Dow futures were off 4.3%.

Nevertheless, sentiment was quick to reverse as investors shift focus on what

Trump administration will seek to achieve. Potential tax cuts and infrastructure

spending which will bring America’s economy stronger again boosted market

performance.

China economic data continue to remain healthy, with no signs of the economy

losing steam. In the latest figures published in November, industrial production

rose 6.1%, retail sales grew 10.1% and fixed-asset investment added 8.3%. Strong

domestic drivers eased concerns over the possible impact of a Trump presidency on

the economy. However, there are still concerns about the sustainability of growth

as regulatory changes continue to drive hot-money flows from sector to sector.

In South Korea, the President, Park Geun-hye, was impeached with an

overwhelming majority of votes in parliament. She was suspended from power

until the constitutional court rules on the lawmakers' decision. It must do so within

six months, which would then start the clock for an election within 60 days.

In December 2016, overall market stabilised and recouped some losses in

November, with the exception of China and Hong Kong market which registered a

big negative return in December.

As expected, the Federal Open Market Committee decided to increase rates by 25

6

basis points on 14 December. Dollar surged 1.1% on the day itself driven mainly

by Federal Reserve’s updated dot-plot which is predicting a faster than previously

expected rate of tightening next year.

Economic numbers in advanced economy especially Europe area showed sign of

improvement in December. PMI numbers in German and France are all in

expansionary mode in the 4th quarter of 2016.

China’s exports gained for November as a cheaper Yuan aided foreign purchasing

as it is partly due to the strength of dollar. However, Trump’s economy policy

towards China also creates uncertainty on China’s currency and export, not to

mention even on political front. At the same time, investors are concern on the

potential of monetary tightening policy in China where as a step to control overly

robust property market in 2016 and currency direction. There was a surprise jump

in shadow-banking activity in November.

Taiwan’s exports for November grew at their strongest pace in nearly four years, as

global retailers stocked up on the island’s hi-tech gadgets for the year-end shopping

season. Exports grew 12.1 percent from a year earlier, the fastest on-year pace since

January 2013. South Korea exports for December also rose for a second straight

month on semi-con, machinery amid nascent recovery.

Going into 2017, US economy finds a strong footing where jump in wages in

December pointed to sustained labour market momentum. In January, additional

227,000 of new jobs were added. Meanwhile, ISM Non-Manufacturing PMI

remained in the expansionary mode for the 85th consecutive month, rising by 56.5

in January.

As for Euro area, inflation accelerated 1.1 percent in December, the fastest pace

since 2013. While the increase was driven almost entirely by recovering oil prices,

the return of price growth is also likely to shift the policy debate at the European

Central Bank. The Composite PMI for the currency bloc finished 2016 with its

highest reading in 67 months at 54.4 in December, driven in part by the weaker

euro.

China new data show growth rising to 6.8% in three months in December. Retail

sales were the main driver of the increase, with industrial production coming in

slightly below expectations. In other good news for policy makers, it seems that

capital controls are starting to pay off as yuan outflows plummeted in December.

In February, US continue to report strong economic data. Labour force

participation rate climbed to 62.9%, the highest since September 2016, while the

average wages rose 3 cents to USD26.00 from USD25.97 in December.

As for Euro area, economic activity unexpectedly rose to the highest level in almost

six years, with the composite Purchasing Managers Index for February climbing to

56.0, according to IHS Markit. While politics continues to dominate coverage of

Europe, investors are starting to recommend looking beyond the noise to find

opportunities.

In China, export growth in USD terms jumped to a stronger-than-expected 7.9% y-

o-y in January from -6.2% in December, with improvement was across the board

by product, from higher value-added products (such as high tech products and

7

mechanical & electrical products) to labour-intensive products (such as garments &

clothing accessories, and footwear & parts).

Market took a breather at the beginning of March following US robust February

jobs report, as it further solidified expectations the Fed will raise interest rates in

the mid of March. Non-farm payrolls grew a robust pace during February as the

construction sector posted its largest gain in almost 10 years.

China reported its first trade deficit in three years in February as imports soared

38.1 percent while exports dropped 1.3 percent. The economy producer prices

surged 7.8 percent in February, the fastest pace since 2008 and a jump which lifts

the outlook for global reflation.

President Park Geun-hye of South Korea saw her parliament's impeachment upheld

by the country's highest court, opening the door for her to face jail time amid a

corruption probe. The graft investigation, which has also snared Samsung

Electronics Co. heir-apparent Jay Y. Lee, is the largest scandal in the nation in

decades. Shares on Seoul's KOSPI index, which have rallied since Park's

impeachment in December.

Federal Reserve raised its rate by 25bps as anticipated. More of a balance

comment/less hawkish than market expected has provided a good sentiment for the

market recovery and moved higher after the rate hike announcement.

In April, while the released of economic data from US soften, the data remains at

strong level, indicating the underlying economy remain healthy. On the other hand,

Euro economic data remained strong, with the Purchasing Managers’ Index for

manufacturing and services rose 56.7 in April, the highest in six years. It was led

by France with Composite PMI unexpected surged to 57.4 from 56.8 in March.

First round of voting in France president election held on 23 April saw the centrist

candidate, Emmanuel Macron and far-right nationalist Marine Le Pen making it

through to the second round runoff which is schedule on May 7. Republican

candidate Francois Fillon, who came in third, is said to back Macron for the May

vote. An early poll is suggesting that he would beat Le Pen by more than 20

percentage points. Euro climbed to all time high at $1.0875, highest level against

the US dollar since November 2016.

Similarly, in Asia, 1Q GDP coming out from China and Korea continue to show

improvement. China reported 1Q2017 GDP growth of 6.9% the fastest pace in six

quarter while Finance Minister of Korea said it potentially beat GDP forecast of

2.6% as export continues to improve.

May saw the market continued its upward momentum. In China, President Xi

JinPing has pledged RMB380 billion in loans of infrastructure spending at the Silk

Road summit in promoting “One Belt, One Road’. Moody’s downgrade of Hong

Kong to Aa2 from Aa1 and China to A1/Stable from Aa3/Negative in the later part

of May, however, did not impact overall markets.

In South Korea, figures show exports are growing at the fastest rate in six years,

buoyed by demand for high-tech memory chips. The winning of Moon, Jae-in for

the South Korean presidency also contribute to the strong stocks market gains.

8

In Jakarta, with Anies/Sandiaga winning the Jakarta election convincingly,

sentiment on the JCI improved as it removes uncertainties and normalises business

sentiment. The recently concluded 1Q results show that earnings growth remains

healthy, and Indonesia reported a slight improvement in its 1Q 2017 GDP numbers

at 5.0 percent yoy (vs 4.9 percent yoy in 4Q 2016), led by government spending

and stronger exports amid higher global trade activity and commodity prices.

In June, Fed raised its interest rate policy rate by 25bps, bringing the fed fund rate

to a new range of 1.00 percent to 1.25 percent. The Fed also laid out a plan to start

slowly reducing their USD4.5 trillion balance sheet, though they did not say

exactly when the process will commence.

The announcement by index provider, MSCI to include 222 Large Cap China A-

shares in the MSCI Emerging Markets, with inclusion to be implemented using a

two-stage process effective on 1 June 2018 and 3 September 2018 helped in

supporting sentiment.

Equity market continued the positive momentum in July despite the ongoing

political uncertainty. In US, sentiment was supported by positive macroeconomic

data, a robust start to the quarterly reporting season and further weakness in the

dollar. Similarly, the macro story in the Euro was positive. The focus in Europe

was the comments by the European Central Bank (“ECB”) president suggesting

that the European economy was strong enough to start the tapering of quantitative

easing.

China too provided a surprisingly strong numbers with 2Q2017 GDP coming in

above expectation, at 6.9% yoy. Producer price index (“PPI”) for June remains in

positive territory, industrial production and exports continue to expand and PMI

number clocked in at 51.7 for June, beating estimates.

Markets held up well in August despite mounting US-North Korea tensions and

terrorist attacks in Spain. Continued strong economic and earnings outlooks as well

as additional clarity on tax reform supported US equities. In Europe, the economic

momentum improved, with 2Q2017 GDP coming reported at 2.2%. Similarly, the

Chinese economic activity continues to be resilient with Chinese companies

reporting good second quarter earnings.

In September, economic data releases continued to support the recovery in the US

economy. Fed officials boosted their projections with the gross domestic product

for this year expected to rise 2.4%, while unemployment rate is expected to fall to

4.3% this year. The unveiling of the tax reform plans, among others, include the

cutting of corporate tax from 35% to 20% also excites the markets in anticipation

of a faster pace of economic growth going forward. Similarly, the Eurozone

economy continues to improve. In addition, the winning of Angela Merkel in

Germany’s election for the fourth term, albeit with a lower than expected score,

provides comfort to the market.

In China, S&P Global Ratings downgrade China’s rating to A1/Stable on

prolonged period of strong credit growth which has increased China’s economic

and financial risks. Nonetheless Chinese economic activity data in August

continued to suggest economic expansion.

Stocks recorded solid and steady gains in October, on continued confidence about

9

earnings and synchronized recovery of global growth. In US, the optimism on the

implementation of tax reform further support market. Meanwhile, the European

Central bank announced that it will halve its bond-buying program to €30 billion

from €60 billion a month from January through September 2018, or longer, if

necessary, until inflation has improved.

In China, the 19th National Congress of the Communist Party of China (“CPC”)

was held, emphasizing on quality of growth rather than pace of growth. Chinese

stocks delivered positive returns in October, on the back of stronger economic data

coupled with stability in yuan.

Market

Outlook

We continue to be positive on China as the financial and currency markets are

stabilizing amidst an improving economy. In addition, the new economic sectors

such as on-line services, e-commerce, technology-related manufacturing and

service sectors are expected to further support growth. For Korea, the improved

business and consumer confidence is expected to drive the economy. Potential

fiscal expansionary measures could be the next catalyst for the market. Taiwanese

technology sector will be supported by the global growth pick up as well as

semiconductor restocking while staying selective on non-tech.

ASEAN markets continue to look expensive, despite some divergence in

performance: P/E multiples for benchmarks in Vietnam and Thailand are at new

10-year highs, whilst Singapore’s also continues to inch up. The popularity of

Indonesia and Philippines have declined slightly in recent weeks, but their

multiples are still close to 10-year highs. Fundamentally, things are certainly

improving, with GDP growth coming in strong or above expectations across most

ASEAN countries. Much of this has been due to exports; farming income as well as

private consumption and investment remains subdued in most parts (with

Philippines and Vietnam being the notable exceptions), but consumer confidence is

gradually improving across the region. All in all, sentiment and prices for ASEAN

equity assets continue to make it difficult to find real value, despite the improved

outlook for growth.

For Malaysia, we believe that going forward, the local market will be driven by

companies with earnings supported by robust external growth. This would mean

our exporters and technology picks would remain as the preferred sectors because

we believe that the much stronger core earnings would outpace the currency

strength. The recent hawkish statement by BNM would mean an imminent interest

rate hike in the near term. This is beneficial to our local banks, which are already

seeing credit quality improvement in the recent quarterly results, and NIM is

expected to improve too, in a rising interest rate environment. As the election is

drawing nearer, the government would tend to escalate the local “feel good” factors

such as the continuous BR1M handout and rolling out of the planned infrastructure

projects. The consumer and construction sectors are likely to be the direct

beneficiaries.

Kuala Lumpur, Malaysia


7 December 2017

Independent auditors’ report to the unitholders of


Report on the audit of the financial statements

Opinion

Basis for opinion

Independence and other ethical responsibilities

Information other than the financial statements and auditors’ report thereon

We have audited the financial statements of Namaa’ Asia-Pacific Equity Growth (“the Fund”),

which comprise the statement of financial position as at 31 October 2017, and the statement of

comprehensive income, statement of changes in equity and statement of cash flows for the year then

ended, and notes to the financial statements, including a summary of significant accounting policies,

as set out on pages 13 to 33.

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

position of the Fund as at 31 October 2017 and of its financial performance and cash flows for the year

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

Reporting Standards.

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

International Standards on Auditing. Our responsibilities under those standards are further described

in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We

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

opinion.

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

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

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

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

Code.

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

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

thereon.

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

not express any form of assurance conclusion thereon.

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

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

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

to be materially misstated.

10


Namaa’ Asia-Pacific Equity Growth (cont’d.)

Responsibilities of the Manager and the Trustees for the financial statements

Auditor’s responsibilities for the audit of the financial statements

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

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

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

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

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

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

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

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

misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit

procedures that are appropriate in the circumstances, but not for the purpose of expressing an

opinion on the effectiveness of the Fund’s internal control.

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

as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’

report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a

guarantee that an audit conducted in accordance approved standards on auditing in Malaysia and

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

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

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

the basis of these financial statements.

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

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

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

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

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

determines is necessary to enable the preparation of financial statements of the Fund that are free from

material misstatement, whether due to fraud or error.

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

ability to continue as a going concern, disclosing, as applicable, matters related to going concern and

using the going concern basis of accounting unless the Manager either intends to liquidate the Fund or

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

The Trustee is responsible for ensuring that the Manager maintains proper accounting and other

records as are necessary to enable true and fair presentation of these financial statements.

11


Namaa’ Asia-Pacific Equity Growth (cont’d.)

Other matters

Ernst & Young Wan Daneena Liza Bt Wan Abdul Rahman

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

Chartered Accountants Chartered Accountant


7 December 2017

We communicate with the Manager regarding, among other matters, the planned scope and timing of

the audit and significant audit findings, including any significant deficiencies in internal control that

we identify during our audit.

This report is made solely to the unitholders of the Fund, as a body, and for no other purpose. We do

not assume responsibility to any other person for the content of this report.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting

estimates and related disclosures made by the Manager.

Conclude on the appropriateness of the Manager’s use of the going concern basis of

accounting and, based on the audit evidence obtained, whether a material uncertainty exists

related to events or conditions that may cast significant doubt on the Fund’s ability to continue

as a going concern. If we conclude that a material uncertainty exists, we are required to draw

attention in our auditors’ report to the related disclosures in the financial statements or, if such

disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit

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

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

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

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

underlying transactions and events in a manner that achieves fair presentation.

12


STATEMENT OF FINANCIAL POSITION

AS AT 31 OCTOBER 2017

2017 2016

Note RM RM

ASSETS

Shariah-compliant investment 4 6,869,403 11,960,068

Amount due from Manager 5 - 351,825

Amount due from Target Fund Manager 6 83,455 -

Cash at banks 235,596 77,848

TOTAL ASSETS 7,188,454 12,389,741

LIABILITIES

Amount due to Manager 5 81,846 -

Amount due to Trustee 7 472 605

Sundry payables and accrued expenses 20,193 18,256

TOTAL LIABILITIES 102,511 18,861

EQUITY

Unitholders’ capital 10(a) 3,474,740 10,597,441

Retained earnings 10(b)(c) 3,611,203 1,773,439

TOTAL EQUITY 10 7,085,943 12,370,880

TOTAL EQUITY AND LIABILITIES 7,188,454 12,389,741

UNITS IN CIRCULATION 10(a) 9,182,417 18,637,459

NET ASSET VALUE PER UNIT 77.17 sen 66.38 sen

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

13


STATEMENT OF COMPREHENSIVE INCOME

FOR THE FINANCIAL YEAR ENDED 31 OCTOBER 2017

2017 2016

Note RM RM

SHARIAH-COMPLIANT INVESTMENT INCOME

Net gain from Shariah-compliant investment:

− Financial assets at fair value through profit or

loss (“FVTPL”) 8 1,868,575 619,175

Gross Income 1,868,575 619,175

EXPENDITURE

Manager’s fee 5 (7,001) (6,007)

Trustee’s fee 7 (7,154) (3,671)

Auditors’ remuneration - current financial year (6,500) (6,000)

Auditors’ remuneration - under provision in prior financial year (500) -

Tax agent’s fee (3,800) (3,500)

Custodian’s fee (50) (53)

Other expenses 9 (5,806) (5,637)

Total Expenditure (30,811) (24,868)

NET INCOME BEFORE TAX 1,837,764 594,307

LESS: INCOME TAX 12 - -

NET INCOME AFTER TAX 1,837,764 594,307

OTHER COMPREHENSIVE INCOME - -

TOTAL COMPREHENSIVE INCOME FOR THE

FINANCIAL YEAR 1,837,764 594,307

Total comprehensive income comprises the following:

Realised income 1,563,976 11,414

Unrealised gain 273,788 582,893

1,837,764 594,307


14


STATEMENT OF CHANGES IN EQUITY


Unitholders’ Retained Total

capital earnings equity

Note RM RM RM

At 1 November 2015 (90,797) 1,179,132 1,088,335

Total comprehensive income for

the financial year - 594,307 594,307

Creation of units 10(a) 14,658,462 - 14,658,462

Cancellation of units 10(a) (3,970,224) - (3,970,224)

Balance at 31 October 2016 10,597,441 1,773,439 12,370,880

At 1 November 2016 10,597,441 1,773,439 12,370,880

Total comprehensive income for

the financial year - 1,837,764 1,837,764

Creation of units 10(a) 11,970,341 - 11,970,341

Cancellation of units 10(a) (19,093,042) - (19,093,042)

Balance at 31 October 2017 3,474,740 3,611,203 7,085,943


15


STATEMENT OF CASH FLOWS


2017 2016

RM RM

CASH FLOWS FROM OPERATING AND

INVESTING ACTIVITIES

Proceeds from sale of Shariah-compliant investment 14,746,106 2,354,960

Manager’s fee paid (7,340) (5,444)

Trustee’s fee paid (7,287) (3,120)

Tax agent’s fee paid (3,500) (3,500)

Custodian’s fee paid (50) (53)

Payments for other expenses (11,169) (11,105)

Purchase of Shariah-compliant investment (7,870,321) (12,636,968)

Net cash generated from/(used in) operating and

investing activities 6,846,439 (10,305,230)

CASH FLOWS FROM FINANCING

ACTIVITIES

Proceeds from creation of units 12,322,774 14,306,029

Payments for cancellation of units (19,011,465) (3,970,224)

Net cash (used in)/generated from financing activities (6,688,691) 10,335,805

NET INCREASE IN CASH AND CASH

EQUIVALENTS 157,748 30,575

CASH AND CASH EQUIVALENTS AT

BEGINNING OF FINANCIAL YEAR 77,848 47,273

CASH AND CASH EQUIVALENTS AT

END OF FINANCIAL YEAR 235,596 77,848

Cash and cash equivalents comprise:

Cash at banks 235,596 77,848


16


NOTES TO THE FINANCIAL STATEMENTS

1. GENERAL INFORMATION

2. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

Standards effective during the financial year

Standards issued but not yet effective

Effective for

financial periods

beginning on or after

MFRS 9: Financial Instruments 1 January 2018

MFRS 15: Revenue From Contracts With Customers 1 January 2018

The Fund was set up with the objective to grow the value of investment in the longer term by

investing in listed equities, equities-related investments and other Islamic instruments that

conform to the Shariah Investment Guidelines across Asia Pacific (ex-Japan) region. Being a

feeder fund, a minimum of 95% of the Fund’s net asset value will be invested in the Am-

Namaa’ Asia-Pacific Equity Growth (“Target Fund”), which is a Shariah-compliant target fund,

denominated in USD and managed by AmFunds Management Berhad (“Target Fund Manager”).

As provided in the Deed, the “accrual period” or the financial year shall end on 31 October and

the units in the Fund were first offered for sale on 15 August 2008.

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

material financial impact to the financial statements.

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

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

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

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

unless otherwise stated in the accounting policies.

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

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

adopted by the Fund.

Namaa’ Asia-Pacific Equity Growth (“the Fund”) was established pursuant to a Deed dated 5

June 2008 as amended by Deeds Supplemental thereto (“the Deed”), between AmFunds

Management Berhad as the Manager, Deutsche Trustees Malaysia Berhad as the Trustee and all

unitholders.

17

MFRS 9 Financial Instruments

3. SIGNIFICANT ACCOUNTING POLICIES

Income recognition

Income tax

Functional and presentation currency

Foreign currency transactions

Statement of cash flows

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

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

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

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

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

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

process of quantifying the impact of the first adoption of MFRS 9.

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

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

consideration received or receivable.

Current tax assets and liabilities are measured at the amount expected to be recovered from or

paid to the tax authorities. The tax rates and tax laws used to compute the amount are those that

are enacted or substantively enacted at the reporting date.

Transactions in currencies other than the Fund’s functional currency (foreign currencies) are

recorded in the functional currency using exchange rates prevailing at the transaction dates. At

each reporting date, foreign currency monetary items are translated into Ringgit Malaysia at

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

or loss.

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

Functional currency is the currency of the primary economic environment in which the Fund

operates that most faithfully represents the economic effects of the underlying transactions. The

functional currency of the Fund is Ringgit Malaysia which reflects the currency in which the

Fund competes for funds, issues and redeems units. The Fund has also adopted Ringgit Malaysia

as its presentation currency.

Current taxes are recognised in profit or loss except to the extent that the tax relates to items

recognised outside profit or loss, either in other comprehensive income or directly in equity.

18

Distribution

Unitholders’ capital

Financial assets

(i) Financial assets at FVTPL

Cash equivalents are short-term, highly liquid Shariah-compliant investment that is readily

convertible to cash with insignificant risk of changes in value.

Financial assets are recognised in the statement of financial position when, and only when, the

Fund becomes a party to the contractual provisions of the financial instrument.

When financial assets are recognised initially, they are measured at fair value, plus, in the case

of financial assets not at fair value through profit or loss, directly attributable transaction costs.

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

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

liability in the period in which it is approved.

The unitholders’ capital of the Fund meets the definition of puttable instruments and is classified

as equity instruments under MFRS 132 Financial Instruments: Presentation (“MFRS 132”).

Financial assets are classified as financial assets at FVTPL if they are held for trading or are

designated as such upon initial recognition. Financial assets held for trading by the Fund

include Shariah-compliant collective investment scheme acquired principally for the

purpose of selling in the near term.

On disposal of Shariah-compliant investment, the net realised gain or loss on disposal is

measured as the difference between the net disposal proceeds and the carrying amount of the

Shariah-compliant investment. The net realised gain or loss is recognised in profit or loss.

The Fund determines the classification of its financial assets at initial recognition, and the

categories applicable to the Fund include financial assets at fair value through profit or loss

(“FVTPL”) and receivables.

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

Changes in the fair value of those financial instruments are recorded in ‘Net gain or loss on

financial assets at fair value through profit or loss’. Exchange differences, if any, on

financial assets at FVTPL are not recognised separately in profit or loss but are included in

net gains or net losses on changes in fair value of financial assets at FVTPL.

For Shariah-compliant investment in collective investment scheme, fair value is determined

based on the closing net asset value per unit of the collective investment scheme. The

difference between the cost and fair value is treated as unrealised gain or loss and is

recognised in profit or loss. Unrealised gains or losses recognised in profit or loss are not

distributable in nature.

19

(ii) Receivables

Impairment of financial assets

(i) Receivables carried at amortised cost

Financial liabilities

The Fund’s financial liabilities are recognised initially at fair value plus directly attributable

transaction costs and subsequently measured at amortised cost using the effective profit method.

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

Gains and losses are recognised in profit or loss when the liabilities are derecognised, and

through the amortisation process.

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

entered into and the definitions of a financial liability.

Financial liabilities, within the scope of MFRS 139, are recognised in the statement of financial

position when, and only when, the Fund becomes a party to the contractual provisions of the

financial instrument.

Subsequent to initial recognition, receivables are measured at amortised cost using the

effective profit method. Gains and losses are recognised in profit or loss when the

receivables are derecognised or impaired, and through the amortisation process.

If any such evidence exists, the amount of impairment loss is measured as the difference

between the asset’s carrying amount and the present value of estimated future cash flows

discounted at the financial asset’s original effective profit rate. The impairment loss is

recognised in profit or loss.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can

be related objectively to an event occurring after the impairment was recognised, the

previously recognised impairment loss is reversed to the extent that the carrying amount of

the asset does not exceed its amortised cost at the reversal date. The amount of reversal is

recognised in profit or loss.

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

are classified as receivables.

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

asset is impaired.

The carrying amount of the financial asset is reduced through the use of an allowance

account. When a receivable becomes uncollectible, it is written off against the allowance

account.

To determine whether there is objective evidence that an impairment loss on financial assets

has been incurred, the Fund considers factors such as the probability of insolvency or

significant financial difficulties of the debtor and default or significant delay in payments.

20

Classification of realised and unrealised gains and losses

Significant accounting estimates and judgments

4. SHARIAH-COMPLIANT INVESTMENT

2017 2016

RM RM

Financial assets at FVTPL

At cost:

Collective investment scheme 5,842,147 11,206,600

At fair value:

Collective investment scheme 6,869,403 11,960,068

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

may sell its Shariah-compliant investment in the short-term for profit-taking or to meet

unitholders’ cancellation of units.

No major judgments have been made by the Manager in applying the Fund’s accounting

policies. There are no key assumptions concerning the future and other key sources of estimation

uncertainty at the reporting date, that have a significant risk of causing a material adjustment to

the carrying amounts of assets and liabilities within the next financial year.

Unrealised gains and losses comprise changes in the fair value of financial instruments for the

period and from reversal of prior period’s unrealised gains and losses for financial instruments

which were realised (i.e. sold, redeemed or matured) during the reporting period.

Realised gains and losses on disposals of financial instruments classified at fair value through

profit or loss are calculated using the weighted average method. They represent the difference

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

The preparation of the Fund’s financial statements requires the Manager to make judgments,

estimates and assumptions that affect the reported amounts of revenues, expenses, assets and

liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty

about these assumptions and estimates could result in outcomes that could require a material

adjustment to the carrying amount of the asset or liability in the future.

21

Details of Shariah-compliant investment as at 31 October 2017 are as follows:

Fair

value as a

percentage of

Collective investment Number Fair Purchase net asset

scheme of units value cost value

RM RM %

Am-Namaa’ Asia-Pacific

Equity Growth (“Target Fund”) 98,775 6,869,403 5,842,147 96.94

Excess of fair value over cost 1,027,256

2017 2016

% of % of

By country portfolio portfolio

Hong Kong 26.4 18.9

Taiwan 16.8 17.3

South Korea 12.9 9.7

Indonesia 9.9 9.2

Australia 9.2 7.8

Thailand 6.7 5.5

Malaysia 5.2 4.9

Philippines 3.3 2.8

Singapore - 5.8

Cash and others 9.6 18.1

100.0 100.0

By sector

Information technology 20.6 17.9

Consumer discretionary 16.3 16.3

Communications 8.7 10.3

Energy 8.3 4.1

Materials 7.0 5.3

Consumer staples 6.9 4.8

(Forward)

A minimum of 95% of its net asset value will be invested in the Target Fund. However, the asset

allocation may be reduced due to creation of units at the point of reporting date. The ratio will be

adjusted back to the minimum level after the reporting period, if need be.

The Target Fund’s Shariah-compliant investment objective and policy are to grow the value of

investment in the longer term by investing in listed equities, equities-related investments and

other Islamic instruments that conform to the Shariah Investment Guidelines across Asia Pacific

(ex-Japan) region. As at the reporting date, the Shariah-compliant investment portfolio of the

Target Fund is made up of the following:

22

2017 2016

% of % of

portfolio portfolio

Industrial 6.6 4.4

Healthcare 6.2 9.8

Plantation 2.8 3.0

Trading/Services 2.4 1.8

Financial 2.3 -

Real estate 2.3 1.4

Utility - 2.8

Cash and others 9.6 18.1

100.0 100.0

5. AMOUNT DUE (TO)/FROM MANAGER

2017 2016

RM RM

(Redemption)/creation of units* (81,577) 352,433

Manager’s fee payable (269) (608)

(81,846) 351,825

*

As the Fund is investing in a Target Fund, the Manager’s fee was charged as follows:

2017 2016

% p.a. % p.a.

Manager’s fee charged by the Target Fund Manager,

on the net asset value of the Target Fund (Note a) 1.80 1.80

Manager’s fee charged by the Manager, on the remaining

net asset value of the Fund (Note b) 1.80 1.80

Note a)

Note b)

The amount represents amount (payable to)/receivable from the Manager for units

(redeemed)/created.

The Fund’s share of manager’s fee to the Target Fund Manager has been accounted for

as part of net unrealised changes in fair value of Shariah-compliant investment in

collective investment scheme.

Manager’s fee of the Fund chargeable in the Statement of Comprehensive Income only

relates to 1.80% on the remaining net asset value of the Fund.

23

6. AMOUNT DUE FROM TARGET FUND MANAGER

7. AMOUNT DUE TO TRUSTEE

8. NET GAIN FROM SHARIAH-COMPLIANT INVESTMENT

2017 2016

RM RM

Net gain on financial assets at FVTPL comprised:

− Net realised gain on sale of Shariah-compliant investment 1,336,037 71,809

− Net realised gain/(loss) on foreign currency exchange 258,750 (35,527)

− Net unrealised gain on changes in fair values of Shariah-

compliant investment 677,551 433,518

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

Shariah-compliant investment denominated in foreign

currency (403,763) 149,375

1,868,575 619,175

9. OTHER EXPENSES

The amount due from the Target Fund Manager was for the sale of Shariah-compliant

investment where settlement was not due as at the financial year end.

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

calculated on a daily basis.

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

one month.

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

year amounting to RM1,707 (2016: RM1,941).

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

of units is three business days.

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

one month.

24

10. TOTAL EQUITY

Total equity is represented by:

2017 2016

Note RM RM

Unitholders’ capital (a) 3,474,740 10,597,441

Retained earnings

− Realised income (b) 2,583,947 1,019,971

− Unrealised gain (c) 1,027,256 753,468

7,085,943 12,370,880

(a) UNITHOLDERS’ CAPITAL/UNITS IN CIRCULATION

2016

Number of Number of

units RM units RM

At beginning of the

financial year 18,637,459 10,597,441 1,533,142 (90,797)

Creation during the

financial year 16,602,190 11,970,341 23,178,375 14,658,462

Cancellation during the

financial year (26,057,232) (19,093,042) (6,074,058) (3,970,224)

At end of the financial year 9,182,417 3,474,740 18,637,459 10,597,441

(b) REALISED – DISTRIBUTABLE

2017 2016

RM RM

At beginning of the financial year 1,019,971 1,008,557

Total comprehensive income for the financial year 1,837,764 594,307

Net unrealised gain attributable to Shariah-

compliant investment held transferred to

unrealised reserve [Note 10(c)] (273,788) (582,893)

Net increase in realised reserve for the

financial year 1,563,976 11,414

At end of the financial year 2,583,947 1,019,971

2017

25

(c) UNREALISED – NON-DISTRIBUTABLE

2017 2016

RM RM

At beginning of the financial year 753,468 170,575

Net unrealised gain attributable to Shariah-

compliant investment held transferred from

realised reserve [Note 10(b)] 273,788 582,893

At end of the financial year 1,027,256 753,468

11. UNITS HELD BY RELATED PARTIES

12. INCOME TAX

2017 2016

RM RM

Net income before tax 1,837,764 594,307

Taxation at Malaysian statutory rate of 24% 441,063 142,634

Tax effects of:

Income not subject to tax (545,361) (157,128)

Loss not deductible for tax purposes 96,903 8,526

Restriction on tax deductible expenses for unit trust fund 3,665 3,111

Non-permitted expenses for tax purposes 3,323 2,512

Permitted expenses not used and not available for future

financial years 407 345

Tax expense for the financial year - -

13. DISTRIBUTION

No distribution was declared by the Fund for the financial years ended 31 October 2017 and 31

October 2016.

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

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

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

October 2017 and 31 October 2016.

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

exempted from tax.

A reconciliation of income tax expense applicable to net income before tax at the statutory

income tax rate to income tax expense at the effective income tax rate of the Fund is as follows:

26

14. MANAGEMENT EXPENSE RATIO (“MER”)

2017 2016

% p.a. % p.a.

Manager’s fee 0.06 0.10

Trustee’s fee 0.06 0.06

Fund’s other expenses 0.14 0.25

Total MER 0.26 0.41

15. PORTFOLIO TURNOVER RATIO (“PTR”)

16. SEGMENTAL REPORTING

17. TRANSACTIONS WITH THE TARGET FUND MANAGER

Target Fund Manager

RM %

AmFunds Management Berhad 22,989,372 100.00

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

year.

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

compliant investment to the average net asset value of the Fund calculated on a daily basis, is

0.96 times (2016: 1.24 times).

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

Fund to the average net asset value of the Fund calculated on a daily basis.

The Fund’s MER is as follows:

Transaction value

Details of transactions with the Target Fund Manager for the financial year ended 31 October

2017 are as follows:

As the Fund operates substantially as a feeder fund which invests primarily in the Target Fund, it

is not possible or meaningful to classify its Shariah-compliant investment by separate business

or geographical segments. A summary of the Shariah-compliant investment portfolio of the

Target Fund is disclosed in Note 4.

As stated in Note 1, the Fund is a feeder fund whereby a minimum of 95% of the Fund’s net

asset value will be invested in the Target Fund.

27

18. FINANCIAL INSTRUMENTS

(a) Classification of financial instruments

Financial

Financial Receivables liabilities at

assets at amortised amortised

at FVTPL cost cost Total

RM RM RM RM

Assets

Shariah-compliant investment 6,869,403 - - 6,869,403

Amount due from Target Fund

Manager - 83,455 - 83,455

Cash at banks - 235,596 - 235,596

Total financial assets 6,869,403 319,051 - 7,188,454

Liabilities

Amount due to Manager - - 81,846 81,846

Amount due to Trustee - - 472 472

Sundry payables and accrued

expenses - - 20,193 20,193

Total financial liabilities - - 102,511 102,511

Assets

Shariah-compliant investment 11,960,068 - - 11,960,068

Amount due from Manager - 351,825 - 351,825

Cash at bank - 77,848 - 77,848

Total financial assets 11,960,068 429,673 - 12,389,741

(Forward)

2016

The above transactions were in respect of Shariah-compliant collective investment scheme.

Transactions in this Shariah-compliant investment do not involve any commission or brokerage.

The significant accounting policies in Note 3 describe how the classes of financial instruments

are measured, and how income and expenses, including fair value gains and losses, are

recognised. The following table analyses the financial assets and liabilities of the Fund in the

statement of financial position by the class of financial instrument to which they are assigned,

and therefore by the measurement basis.

2017

The Manager and the Trustee are of the opinion that the above transactions have been entered in

the normal course of business and have been established under terms that are no less favourable

than those arranged with independent third parties.

28

Financial

Financial Receivables liabilities at

assets at amortised amortised

at FVTPL cost cost Total

RM RM RM RM

2016

Liabilities

Amount due to Trustee - - 605 605

Sundry payables and accrued

expenses - - 18,256 18,256

Total financial liabilities - - 18,861 18,861

Income, expense, gains

and losses

2017 2016

RM RM

Net gain from financial assets at FVTPL 1,868,575 619,175

(b) Financial instruments that are carried at fair value

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

Level 2:

Level 3:

Level 1 Level 2 Level 3 Total

RM RM RM RM

- 6,869,403 - 6,869,403

- 11,960,068 - 11,960,068

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

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

level of the fair value hierarchy:

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

financial instruments by valuation technique:

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

value that are not based on observable market data.

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

fair values are observable; either directly or indirectly; or

2016

2017



29

(c)

Amount due from/(to) Manager

Amount due from Target Fund Manager

Cash at banks

Amount due to Trustee

Sundry payables and accrued expenses

19. RISK MANAGEMENT POLICIES

Market risk

(i) Price risk

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

price movements, the Fund might endure potential loss on its Shariah-compliant investment in

the Target Fund. In managing price risk, the Manager actively monitors the performance and

risk profile of the investment portfolio.

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

reasonable approximation of fair value

The following are classes of financial instruments that are not carried at fair value and whose

carrying amounts are reasonable approximation of fair value due to their short period to

maturity or short credit period:

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

amounts are not reasonable approximation of their respective fair values.

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

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

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

issuer risk, regulatory risk, country risk, management risk and non-compliance/Shariah non-

compliance risk.

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

risks, careful selection of Shariah-compliant investment coupled with stringent compliance to

Shariah-compliant investment restrictions as stipulated by the Capital Market and Services Act

2007, Securities Commission’s Guidelines on Unit Trust Funds and the Deed as the backbone of

risk management of the Fund.

30

Percentage movements in

price by: 2017 2016

RM RM

-5.00% (343,470) (598,003)

+5.00% 343,470 598,003

(ii) Currency risk

Percentage movements in

currencies other than the 2017 2016

Fund’s functional currency: RM RM

-5.00% (348,104) (599,042)

+5.00% 348,104 599,042

Assets denominated in RM % of net RM % of net

United States Dollar equivalent asset value equivalent asset value

Shariah-compliant investment 6,869,403 96.94 11,960,068 96.68

Amount due from Target Fund

Manager 83,455 1.18 - -

Cash at banks 9,220 0.13 20,770 0.17

6,962,078 98.25 11,980,838 96.85

Credit risk

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

the Fund by failing to discharge an obligation. Credit risk applies to distributions receivable. The

issuer of such instruments may not be able to fulfill the required profit payments or repay the

principal invested or amount owing. These risks may cause the Fund’s Shariah-compliant

investment to fluctuate in value.

2017

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

of price by -5.00% and +5.00% respectively:

2016

The net unhedged financial assets of the Fund that are not denominated in Fund’s functional

currency are as follows:

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

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

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

functional currency against the Fund’s functional currency.

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

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

Fund’s functional currency.

Sensitivity of the Fund’s NAV

Sensitivity of the Fund’s NAV

31

Cash at banks are held for liquidity purposes and are not exposed to significant credit risk.

Liquidity risk

Single issuer risk

Regulatory risk

Country risk

Management risk

Non-compliance/Shariah non-compliance risk

The Fund, as a feeder fund, invests significantly all its assets in the Target Fund. The Target Fund

manages the risk by setting internal counterparty limits and undertaking internal credit evaluation

to minimise such risk.

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

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

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

to meet redemption requirements.

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

anticipated payments and cancellations of units by unitholders. Liquid assets comprise of deposits

with licensed financial institutions and other instruments, which are capable of being converted

into cash within 5 to 7 days. The Fund’s policy is to always maintain a prudent level of liquid

assets so as to reduce liquidity risk.

The Fund, as a feeder fund, invests significantly all its assets in the Target Fund. The Target Fund

is restricted from investing in securities issued by any issuer in excess of a certain percentage of its

net asset value. Under such restriction, the risk exposure to the securities of any single issuer is

diversified and managed by the Target Fund Manager based on internal/external ratings.

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

asset value of the Fund.

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

net asset value of the Fund.

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

Deed of the Fund, securities law or guidelines issued by the regulators. In the case of an Islamic

Fund, this includes the risk of the Fund not conforming to Shariah Investment Guidelines. Non-

compliance risk may adversely affect the Shariah-compliant investment of the Fund when the Fund

is forced to rectify the non-compliance.

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

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

may be adversely affected.

32

20. CAPITAL MANAGEMENT

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

October 2017 and 31 October 2016.

The specific risks associated to the Target Fund include market risk, securities risk, emerging

market risk, settlement and credit risks, regulatory and accounting standards risks, political risk,

custody risk and liquidity risk.

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

value by expanding its fund size to benefit from economies of scale and achieving growth in net

asset value from the performance of its Shariah-compliant investment.

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

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

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

33


STATEMENT BY THE MANAGER


7 December 2017

GOH WEE PENG

For and on behalf of the Manager


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

Namaa’ Asia-Pacific Equity Growth do hereby state that in the opinion of the Manager, the

accompanying statement of financial position, statement of comprehensive income, statement of

changes in equity, statement of cash flows and the accompanying notes are drawn up in accordance

with Malaysian Financial Reporting Standards and International Financial Reporting Standards so

as to give a true and fair view of the financial position of the Fund as at 31 October 2017 and the

comprehensive income, the changes in equity and cash flows of the Fund for the financial year then

ended.

34

35

TRUSTEE’S REPORT

36

REPORT OF THE SHARIAH ADVISER TO THE UNITHOLDERS


For The Financial Year Ended 31 October 2017

We have acted as the Shariah Adviser of Namaa’ Asia – Pacific Equity Growth (the Fund). Our role and

responsibility is to ensure that the Fund is managed and operated in accordance with approved Shariah

principles.

We are of the view that the Fund is managed and operated accordance with the Shariah rulings issued by

us, the Shariah Adviser of the Fund.

In addition, we confirm that we have reviewed all the securities in the investment portfolio of the Fund

and opine that these securities are in accordance with our Shariah rulings. These securities are in line with

the guidelines laid out by the Shariah Advisory Council (SAC) of the SC or the SAC of Bank Negara

Malaysia (BNM). For instruments not classified as Shariah-compliant by the SAC of the SC or SAC of

BNM, a statement stating that the status of the instruments has been determined in accordance with the

ruling issued by the Shariah adviser.

…………………………………………..

Assoc. Prof. Dr. Azman Bin Mohd Noor

for and on behalf of

Al Rajhi Banking & Investment

Corporation (Malaysia) Berhad

Date: 7 December 2017

37

DIRECTORY

Head Office 9th

Floor, Bangunan Ambank Group

55, Jalan Raja Chulan, 50200 Kuala Lumpur

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

Email: [email protected]

Postal Address AmFunds Management Berhad

P.O Box 13611, 50816 Kuala Lumpur

Related Institutional Unit Trust Agent

AmBank (M) Berhad Head Office

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

No. 8 Jalan Yap Kwan Seng, 50450 Kuala Lumpur

AmInvestment Bank Berhad Head Office

Company No. 23742-V 22nd

Floor, Bangunan AmBank Group

55 Jalan Raja Chulan, 50200 Kuala Lumpur

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

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

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

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

mailto:[email protected]

Semi-Annual Report28 February 2015

03 2132 2888 | aminvest.com | [email protected]

AmFunds Management Berhad (155432-A)

annual report for namaa’ asia-pacific equity growth...and that unit prices and investment returns...

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