TA Asian Dividend Income Fund€¦ · TA Asian Dividend Income Fund (For the 6 months ended 31 December 2019) 4 Manager’s Report TA Asian Dividend Income Fund Fund Category/Type

For the nancial year ended30 June 2020

Annual Report

TA Asian Dividend Income Fund

199501011387 (340588-T)

TA Asian Dividend Income Fund (For the financial year ended 30 June 2020)

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Contents

Contents 1 Key Performance Data 2 Manager’s Report 4 Market Review 8 Economic Outlook 8 Market Outlook And Investment Strategy 8 Size Of Unitholdings 9 Soft Commission 9 Other Matters 9 Trustee’s Report 24 Statement By The Manager 25 Independent auditors' report to the unitholders of TA Asian Dividend Income Fund 26 Statement Of Comprehensive Income 29 Statement Of Financial Position 30 Statement Of Changes In Net Asset Value ("NAV") 31 Statement Of Cash Flows 32 Notes To The Financial Statements 33 Corporate Information 61


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Key Performance Data

Year ended Year ended Year ended

30/06/2020 30/06/2019 30/06/2018

PORTFOLIO COMPOSITION (% OF NAV)

Collective Investment Scheme 95.55 94.22 97.64

Cash (Net of Liabilities) 4.45 5.78 2.36

Total Investment 100.00 100.00 100.00

Total Net Asset Value (RM'000) 58,226 81,772 89,300

Units In Circulation (Units '000) 202,297 243,622 268,208

Net Asset Value Per Unit (RM) 0.2878 0.3356 0.3330

Management Expense Ratio (MER) (%) * 0.75 0.74 0.93

Portfolio Turnover Ratio (PTR) (times) ** 0.18 0.12 0.18

UNIT PRICES ^

NAV Per Unit (RM) 0.2878 0.3356 0.3330

Highest NAV Per Unit for the Year (RM) 0.3393 0.3436 0.3675

Lowest NAV Per Unit for the Year (RM) 0.2399 0.2972 0.3289

^ Ex-distribution

DISTRIBUTION/ UNIT SPLIT

Gross Distribution Per Unit (sen) 1.70 1.90 1.67

Net Distribution Per Unit (sen) 1.70 1.90 1.67

Date of Distribution # 31/07/2019 # 31/07/2018 # 31/07/2017

to 30/04/2020 to 30/04/2019 to 30/04/2018

TOTAL RETURN (%)

Capital Return -14.24 0.78 -6.49

Income Return 4.70 6.07 4.49

Total Return of Fund -9.54 6.85 -2.00

Total Return of the Benchmark

- MSCI AC Asia Pacific Ex Japan TR USD (in MYR) -7.43 5.63 3.38

- MSCI AC Asia Pacific Ex Japan TR USD (in USD) -10.73 3.25 9.86

* The MER for the current financial year has registered an increased as compared to the previous financial year's resultdue to decrease in average net asset value of the Fund.

** The PTR for the current financial year has registered an increase as compared to the previous financial year's resultdue to increase in average transaction value of the Fund.

# During the financial year, the Fund declared a gross distribution of 0.50 sen, 0.60 sen and 0.30 sen per unit everyquarter ended of the month from 31/07/2019 to 30/04/2020.


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AVERAGE TOTAL RETURN (%)

Benchmark Benchmark

Fund (in MYR) (in USD)

Period

1 Year (30/06/2019 - 30/06/2020) -9.51 -7.41 -10.70

3 Years (30/06/2017 - 30/06/2020) -1.79 0.27 0.33

5 Years (30/06/2015 - 30/06/2020) 1.98 5.16 2.52

ANNUAL TOTAL RETURN (%)

Benchmark Benchmark

Fund (in MYR) (in USD)

Period

30/06/2019 - 30/06/2020 -9.54 -7.43 -10.73

30/06/2018 - 30/06/2019 6.85 5.63 3.25

30/06/2017 - 30/06/2018 -2.00 3.38 9.86

30/06/2016 - 30/06/2017 21.96 33.38 25.27

30/06/2015 - 30/06/2016 -4.53 -3.83 -10.00

Source: Lipper for Investment Management

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


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Manager’s Report

TA Asian Dividend Income Fund

Fund Category/Type Feeder Fund (Equity) / Growth and Income

Fund Objective The Fund seeks to provide income and long-term capital appreciation by investing in a collective investment scheme which invests mainly in a portfolio of Asian stocks.

Performance Benchmark

MSCI Asia Pacific Ex Japan Index (Since inception to 2 September 2018)

MSCI AC Asia Pacific ex Japan High Dividend Yield Index (effective 3 September 2018)

Fund’s Distribution Policy

The Fund intends to distribute income on a quarterly basis, if any, during its financial year.

Fund’s Performance and Investment Strategies Employed

TA Asian Dividend Income Fund ("TADIF") was managed within its objective for the financial year under review and met its objective to provide income but did not meet its objective of providing long-term capital returns. For the financial year ended 30 June 2020 the Fund’s total return was −9.54% and underperformed its benchmark returns of −7.43%.

The Fund benefitted from the weighting in China and Taiwan which increased significantly over the period under review. China was the strongest contributor with the performance of Kweichow Moutai, a grain-based sprit manufacturer, particularly strong, this is now one of the largest listed beverage companies globally. Taiwan was also a significant positive contributor as the technology stocks held there such as Taiwan Semiconductor Manufacturing, Yageo Corporation and Powertech Technology were some of the strongest contributors across the Fund. The Fund was also a beneficiary of its underweight position in Hong Kong as tensions impacted retail sales, property sale volumes and sentiment.

The largest detractor to performance by country was the positioning in Australia, despite an overweight position versus the benchmark the impact of not owning stocks such as Wesfarmers, in particular, had a negative impact on performance. The weak performance of portfolio stocks such as Treasury Wine Estates and Dexus, an office Real Estate Investment Trust (“REIT”), were also key detractors to


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performance. Korea and Indonesia were the other main detractors with stock selection a negative as Bank Negara Indonesia and SK Innovation, a Korean oil refiner and petrochemicals group, performed poorly in the period under review, though both stocks were sold in the period.

The key additions in China included China Resources Cement on a stronger outlook for cement prices and low inventory as major China infrastructure projects such as subways continued. We also added Chinese tissue, diaper and sanitary towel producer Hengan International on expectations of a more benign competitive environment and falling raw material costs. This was funded by the sales of Mapletree North Asia Trust and Chow Tai Fook as both names were impacted by the deteriorating conditions in Hong Kong. In Taiwan, exposure to technology component names Powertech and Yageo was added on attractive valuation and compelling dividend yields. To fund these purchases the Singapore country weight was significantly reduced in the period with the sale of Singapore Telecommunications and DBS Bank on a deteriorating Singapore outlook alongside increased margin pressure for financials from falling interest rates with higher risk of loan provisions. Mapletree Commercial Trust, a Singapore REIT, was also sold due to its exposure to shopping malls as retails sales collapsed.

(Source: Janus Henderson Investors)

Analysis of Fund’s Performance

30/06/20 30/06/19 % Change

NAV/unit (RM) 0.2878 0.3356 -14.24

Total NAV (RM’000)

58,226 81,772 -28.79

Income Distribution (%)

Capital Return # (%)

Total Return (%)

4.70 -14.24 -9.54

# Capital Return components:

Collective investment scheme

Cash and cash equivalents

30/06/20 30/06/19 % Change

MSCI AC Asia Pacific Ex Japan (in MYR)

62.65 67.68 -7.43


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MSCI AC Asia Pacific Ex Japan (in USD)

14.62 16.38 -10.74

Performance Chart

Source : Lipper Investment Management

Distribution/Unit Split

During the financial year, the Fund declared a gross distribution of 0.50 sen, 0.60 sen and 0.30 sen per unit every quarter ended of the month from 31 July 2019 till 30 April 2020.

The effect on NAV arising from the distribution for the financial year ended 30 June 2020 is as follows:

Date NAV Before Distribution (RM)

Gross Distribution (RM)

NAV After Distribution (RM)

31/07/19 0.3315 0.50 sen 0.3265

31/10/19 0.3351 0.60 sen 0.3291

31/01/20 0.3135 0.30 sen 0.3105

30/04/20 0.2863 0.30 sen 0.2833

Asset Allocation 30/06/20 30/06/19

Cash (Net of Liabilities) 4.45%

Cash (Net of Liabilities) 5.78%

Collective Investment Scheme 95.55%

Collective Investment Scheme 94.22%


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Asset allocation during the financial year under review was primarily in Collective Investment Scheme with the remaining in liquid assets.

Collective Investment Scheme

30/06/20 30/06/19

% NAV % NAV

Janus Henderson Horizon Fund - Asian Dividend Income Fund

95.55 94.22

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


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Market Review The period under review was dominated by the impact of the Coronavirus Disease of 2019 (“COVID-19”) virus which created extreme market volatility in 2020 with unprecedented shutdown of economic activity. This was in stark contrast to the first half of the period under review which witnessed a positive performance as the United States (“US”) and China trade tensions diffused somewhat following agreement for a Phase 1 trade deal alongside an improving outlook for the technology sector as the 5G theme gained momentum. However, the emergence of the coronavirus and the ensuing economic fallout led to a 32% drop for the MSCI All Country Asia Pacific ex Japan High Dividend Yield Index from mid-January 2020 to mid-March 2020. The index subsequently recovered 29% from this trough as economies emerged from a period of “lockdown” with unprecedented Central Bank and government support and a gradual recovery in economic activity.


Economic Outlook North Asian markets posted a stronger performance than South Asia. Whilst China and Korea were severely impacted by the initial onset of the virus, they recovered markedly following a widespread and strict response from their governments. However, the South Asian response was less effective, in many cases due to limited room for fiscal expansion to offset the severe economic impact of the virus. India, Indonesia, Thailand and Singapore were the most impacted and were the worst performing markets over the period under review. North Asia continues to be favoured for the strategy given macro-economic strength, response to the virus, valuation and opportunities for dividend yield.

At the sector level technology was the top performer with Samsung Electronics in particular benefiting from improving chip demand on the back of a more buoyant projection on smartphone and Personal Computer (“PC”) replacement demand. Healthcare was the next best performer. At the other end, Energy and Industrials sectors were the weakest performers as the oil price collapsed along with industrial activity over the period. In addition, the traditionally more defensive sectors of Communications Services and Utilities were also very weak performers demonstrating the indiscriminate nature of the market falls.


Market Outlook And Investment Strategy We are positive on Asia Pacific markets in the medium to long-term, especially on a relative basis against other regions as we believe they are best positioned to ride out the volatility caused by the coronavirus. In the short term we expect volatility to continue as markets digest the duration of the virus' impact on economic growth and stability. Corporate earnings are likely to come under pressure in the short term although we are confident that dividends will prove more resilient considering the excess cash being


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generated and the low level of dividends paid out compared to earnings. We remain focused on domestic-orientated companies with strong cash flows and sustainable and growing dividends.


Size Of Unitholdings - As at 30 June 2020

Size of Holdings

(units)

No. of

Unitholders

% of

Unitholders

No. of Units

Held ('000)

% of Unit

Held

5,000 and below 77 23.48% 192 0.09%

5,000-10,000 49 14.93% 368 0.18%

10,001-50,000 112 34.15% 2,697 1.33%

50,000-500,000 79 24.09% 10,915 5.41%

500,001 and above 11 3.35% 188,125 92.99%

Total 328 100.00% 202,297 100.00%

Soft Commission

The Manager retains soft commissions received from brokers only if the goods and services are of demonstrable benefits to the unitholders as allowed under the Securities Commission's Guidelines on Unit Trust Funds. The soft commission received include research and advisory services which are used to support the investment decision making process and are of demonstrable benefit to Unitholders of the Fund.

Other Matters

We have registered a Replacement Master Prospectus dated 1 June 2020 with Securities Commission Malaysia. This Master Prospectus replaces and supersedes the Master Prospectus dated 20 August 2018, First Supplementary Master Prospectus dated 9 January 2019 and Second Supplementary Master Prospectus dated 10 June 2019. The changes were effective 1 June 2020.

Refer to list of amendments from pages 10 to 23 in respect of the Master Prospectus for your reference.

You are advised to read and understand the contents of the Master Prospectus which is available at our website at www.tainvest.com.my.


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No. Fund Name Current positions as provided in the Master Prospectus dated 20 August 2018 as amended by the First Supplementary Master Prospectus dated 9 January 2019 and the Second Supplementary Master Prospectus dated 10 June 2019.

Revised positions as provided in the replacement master prospectus dated 1 June 2020

1. TADIF Investment Policy, Strategy and Asset Allocation A minimum of 95% of the Fund’s NAV will be invested in the Target Fund with the balance in liquid assets.

The investment objective of the Target Fund is to seek an above-benchmark dividend yield from a portfolio of Asian stocks with a focus on value and long-term capital appreciation. At least two-thirds of the Target Fund’s total assets (after deduction of cash) will be invested in Asian equity securities and equity instruments which in the view of the investment manager of the Target Fund offer prospects for above average dividends or reflect such prospects.

The Target Fund may make use of one or a combination of the following instruments / strategies in order to achieve the Target Fund’s objective: asset and mortgage-backed securities, convertible bonds, structured notes, options, futures and forwards on stocks, indices, bonds and interest rates, contracts for difference, warrants, OTC swaps including equity swaps, asset swaps and credit default swaps, warrants,

Investment Policy, Strategy and Asset Allocation A minimum of 95% of the Fund’s NAV will be invested in the Target Fund with the balance in liquid assets. The Manager may adopt a temporary defensive strategy by maintaining a sufficient level of liquid asset that may be inconsistent with the Fund’s principal investment and asset allocation strategy. The defensive strategy may be necessary to protect the Fund’s investment in response to adverse market, economic, political, or any other conditions. As a result, the Fund’s performance may diverge from the Target Fund’s return and tracking error may increase. If and when the Manager considers the investment in the Target Fund is unable to meet the objective of the Fund, the Manager may choose to replace the Target Fund with another collective investment scheme that is deemed more appropriate. The Manager will seek Unit Holders’ approval before any such changes are made.


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equity linked notes and currency forwards. The investment manager of the Target Fund may from time-to-time consider hedging currency and interest rate exposure but will not generally enter into contracts involving a speculative position in any currency or interest rate.

The Manager may adopt a temporary defensive strategy by maintaining a sufficient level of liquid asset that may be inconsistent with the Fund’s principal investment and asset allocation strategy. The defensive strategy may be necessary to protect the Fund’s investment in response to adverse market, economic, political, or any other conditions. As a result, the Fund’s performance may diverge from the Target Fund’s return and tracking error may increase.

If and when the Manager considers the investment in the Target Fund is unable to meet the objective of the Fund, the Manager may choose to replace the Target Fund with another collective investment scheme that is deemed more appropriate. The Manager will seek Unit Holders’ approval before any such changes are made.

INFORMATION OF THE TARGET FUND – JANUS HENDERSON HORIZON FUND – ASIAN DIVIDEND INCOME FUND

INFORMATION OF THE TARGET FUND – JANUS HENDERSON HORIZON FUND – ASIAN DIVIDEND INCOME FUND


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Investment Restrictions of the Target Fund

5. (d) The total value of the

transferable securities or money market instruments held by the Target Fund in the issuing bodies in each of which it invests more than 5% of its net assets must not then exceed 40% of the value of its net assets. This limitation does not apply to deposits and OTC derivative transactions made with financial institutions subject to prudential supervision. The transferable securities and money market instruments referred to in the two indents of 5 (c) above shall not be taken into account for the purpose of applying the limit of 40% referred to in this paragraph.

Notwithstanding the individual limits laid down in sub-paragraphs 5 (a) to (d) above, the Target Fund may not combine: - investments in transferable securities or money market instruments issued by a single entity, and/or - deposits made with a single entity, and/or - exposures arising from OTC derivative transactions undertaken with a single entity in excess of 20% of its net assets.

Investment Restrictions of the Target Fund 5. (d) The total value of the

transferable securities or money market instruments held by the Target Fund in the issuing bodies in each of which it invests more than 5% of its net assets must not then exceed 40% of the value of its net assets. This limitation does not apply to deposits and OTC derivative transactions made with financial institutions subject to prudential supervision. The transferable securities and money market instruments referred to in the two indents of 5 (c) above shall not be taken into account for the purpose of applying the limit of 40% referred to in this paragraph.

Notwithstanding the individual limits laid down in sub-paragraphs 5 (a) to (d) above, the Target Fund may not combine: - investments in transferable securities or money market instruments issued by a single entity, and/or - deposits made with a single entity, and/or - exposures arising from OTC derivative transactions undertaken with a single entity in excess of 20% of its net assets.


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When a transferable security or money market instrument embeds a derivative, the latter must be taken into account when complying with the requirements of the above mentioned restrictions. The limits provided for in sub-paragraphs 5 (a) to (d) above may not be combined, and thus investments in transferable securities or money market instruments issued by the same entity or in deposits or derivative instruments made with this entity carried out in accordance with paragraphs 5 (a) to (d) shall under no circumstances exceed in total 35% of the net assets of the Target Fund. Companies which are included in the same group for the purposes of consolidated accounts, as defined in accordance with Directive 83/349/ EEC or in accordance with recognized international accounting rules, are regarded as a single entity for the purpose of calculating the investment limits mentioned in sub-paragraphs 5 (a) to (d) above. The Target Fund may not invest cumulatively more that 20% of its net assets in transferable securities or money market instruments of the same group subject to restrictions 5 (a) and three

When a transferable security or money market instrument embeds a derivative, the latter must be taken into account when complying with the requirements of the above mentioned restrictions. The limits provided for in sub-paragraphs 5 (a) to (d) above may not be combined, and thus investments in transferable securities or money market instruments issued by the same entity or in deposits or derivative instruments made with this entity carried out in accordance with paragraphs 5 (a) to (d) shall under no circumstances exceed in total 35% of the net assets of the Target Fund. Companies which are included in the same group for the purposes of consolidated accounts, as defined in accordance with Directive 83/349/ EEC or in accordance with recognized international accounting rules, are regarded as a single entity for the purpose of calculating the investment limits mentioned in sub-paragraphs 5 (a) to (d) above.

The Target Fund may not invest cumulatively more that 20% of its net assets in transferable securities or money market instruments of the same


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indents under 5 (d) above.

Without prejudice to the limits laid down in paragraph 7 of this section below, the limit of 10% laid down in sub-paragraph 5 (a) above is raised to a maximum of 20% for investment in equity and/or debt securities issued by the same body when the aim of the investment policy of the Target Fund is to replicate the composition of a certain equity or debt securities index which is recognised by the CSSF, on the following basis:

• the composition of the index is sufficiently diversified,

• the index represents an adequate benchmark for the market to which it refers,

• it is published in an appropriate manner.

This limit is 35% where that proves to be justified by exceptional market conditions in particular in regulated markets where certain transferable securities or money market instruments are highly dominant. The investment up to this limit is only permitted for a single issuer.

group subject to restrictions 5 (a) and the three indents under 5 (d) above.

Without prejudice to the limits laid down in paragraph 7 of this section below, the limit of 10% laid down in sub-paragraph 5 (a) above is raised to a maximum of 20% for investment in equity and/or debt securities issued by the same body when the aim of the investment policy of the Target Fund is to replicate the composition of a certain equity or debt securities index which is recognised by the CSSF, on the following basis:

• the composition of the index is sufficiently diversified,

• the index represents an adequate benchmark for the market to which it refers,

• it is published in an appropriate manner.

This limit is 35% where that proves to be justified by exceptional market conditions in particular in regulated markets where certain transferable securities or money market instruments are highly dominant.


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By way of derogation, the Target Fund is authorised to invest up to 100% of its net assets in different transferable securities and money market instruments issued or guaranteed by an EU Member State, its local authorities, by another member state of the OECD, the G20 (international forum for the governments and central bank governors from 20 major economies), by Singapore and by Hong Kong or public international bodies of which one or more EU Member States are members, provided that (i) such securities are part of at least six different issues and (ii) securities from any one issue do not account for more than 30% of the net assets of the Target Fund.

For the avoidance of doubt, the total assets of the Target Fund, taking into account its total risk exposure, may not exceed 210% of its net asset value.

The investment up to this limit is only permitted for a single issuer.

By way of derogation, the Target Fund is authorised to invest up to 100% of its net assets in different transferable securities and money market instruments issued or guaranteed by an EU Member State, its local authorities, by another member state of the OECD, the G20 (international forum for the governments and central bank governors from 20 major economies), by Singapore and by Hong Kong or public international bodies of which one or more EU Member States are members, provided that (i) such securities are part of at least six different issues and (ii) securities from any one issue do not account for more than 30% of the net assets of the Target Fund.


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2. All Funds CHARGES DIRECTLY INCURRED ON SALE AND REPURCHASE OF UNITS

* The penalty fee of 0.50% of the NAV per Unit is the maximum rate which each of our distribution channels (IUTAs, Unit Trust Consultants and Direct Investments through the Manager) can impose on investors.Please note that investors investing via EPF Members Investment Scheme will only be charged a maximum Sales Charge of 3.00% of the NAV per unit. Funds approved under the EPF Members Investment Scheme are subject to change. Investors may contact the Manager for the list of funds.

Note: All charges disclosed are based on the prevailing NAV per Unit of the respective Funds.

The Manager reserves the right to waive and/or reduce the service charge REPURCHASE CHARGE/ PENALTY FEE, SWITCHING FEE AND TRANSFER FEE from time to time at its absolute discretion.

CHARGES DIRECTLY INCURRED ON SALE AND REPURCHASE OF UNITS

Please note that investors investing via EPF Members Investment Scheme will only be charged a maximum Sales Charge of 3.00% of the NAV per unit. Funds approved under the EPF Members Investment Scheme are subject to change. Investors may contact the Manager for the list of funds.

Note: All charges disclosed are based on the prevailing NAV per Unit of the respective Funds.

The Manager reserves the right to waive and/or reduce the service charge, REPURCHASE CHARGE, SWITCHING FEE AND TRANSFER FEE from time to time at its absolute discretion.


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3. All Funds APPLICATION AND REDEMPTION

Purchase of Units

Nil

Redemption Redemption must be submitted by completing the transaction form to the respective servicing agent or direct to TAIM office. The transaction form is available at TAIM head office or at authorised business centres. TAIM reserves the right to reject any redemption request that is unclear, incomplete and/ or not accompanied by the required documents. Investors are strongly advised to contact our customer service to confirm receipt of instruction given by fax.

Any valid redemption request received by TAIM’s offices before 4.00 p.m. will be processed based on the NAV per Unit calculated at the end of the Business Day. A request received after 4.00 p.m. will be deemed to have been received on the next Business Day.If redemption received on non-business day, the request will be processed based on the NAV per unit Calculated at the close of the next Business Day.

APPLICATION AND REDEMPTION

Purchase of Units

For TAGTF All applicants intending to invest in a Class other than MYR Class and MYR-Hedged Class are required to have a foreign currency account with any financial institution as all transactions relating to the particular foreign currency will ONLY be made via telegraphic transfers.

Redemption Redemption must be submitted by completing the transaction form.

If you give us written instruction, your letter should include:

a) your investment account number; b) the name of the fund and its “Class” (if any) that you wish to redeem your Units from; c) the number of Units that you intend to redeem; and d) instruction on what we should do with the money (e.g. credit into your bank account).

Redemption request sent via fax are accepted by us. Receipt of fax copy should not be an indication of acceptance of a redemption request by us or completion of transaction. We shall not be responsible of redemption requests that are not processed as a result of incomplete transmission of fax.We reserve the right to reject any redemption request that is unclear, incomplete and/ or not accompanied by


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Redemption proceed will be paid within ten (10) days, provided the completed documents are received by TAIM head office.

In case of joint holders, TAIM will process the redemption request based on the operating instruction stated in the account opening form when you first invested.

All redemption proceeds will be by default made payable to the principal applicant, unless there is a request by the principal applicant that the proceeds be made payable to the joint applicant.

Should there be any discrepancies between the published price and the price adopted by us, our price shall be adopted instead of the price published in the newspapers. We can ensure that the prices forwarded to the newspapers are accurate. However we cannot assume any responsibility or be liable for any error in the published prices.

the required documents. Investors are strongly advised to contact our customer service to confirm receipt of instruction given by fax.

Any valid redemption request received by our head office or any of our business centres before 4.00 p.m. on a Business Day will be processed based on the NAV per Unit calculated at the end of the Business Day. A redemption request received after 4.00 p.m. will be deemed to have been received on the next Business Day. If redemption received on non-business day, the request will be processed based on the NAV per Unit calculated at the close of the next Business Day.


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For TAICP The redemption proceeds of the Fund is calculated in accordance with NAV per unit on the Business Day as illustrated in the table below:

Redemption Instruction

NAV Price

Payment of Redemption Proceeds

Received by 4.00 p.m.

Based on same Business Day, when application is processed

Within 3 Business days from the date the application is processed

For TAICP NAV per unit for redemption as illustrated in the table below:

NAV Price Payment of Redemption Proceeds

Based on redemption when received by TAIM before 4.00 p.m. on a Business Day.

Within 3 Business days from the date the application is received.

All redemption proceeds will be paid via E-payment/telegraphic transfer according to the Unit Holder’s bank account details or cheque as stated in the transaction form. TAIM reserves the right to vary the terms and conditions of redemption mode from time to time, which shall be communicated to you in writing. For redemption proceed under EPF Investment, will transfer back to KWSP for onward credited to EPF Members Account. For further details, please refer to the table on ‘How To Buy, Sell, Switch & Transfer’.

Redemption proceed will be paid within ten (10) days, (or it may subject to the change/revised policy by regulator), from the day the redemption request is received by us based on the selected payment method stated in the transaction form received by our head office or business centres. In case of joint holders, we will process the redemption request based on the operating instruction stated in the account opening form when you first invested in the Fund.

For avoidance of doubt, all redemption proceeds will be made payable to the principal applicant, unless there is a request by the principal applicant that the proceeds be made payable to the joint applicant.


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Should there be any discrepancies between the published price and the price adopted by us, our price shall be adopted instead of the price published in the newspapers. We can ensure that the prices forwarded to the newspapers are accurate. However we will not assume any responsibility or be liable for any error in the prices published in the newspapers.

We reserve the right to vary the terms and conditions of redemption payment mode from time to time, which shall be communicated to you in writing.

For EPF Investment

For redemption proceed under EPF Investment, we will transfer back the redemption payment to KWSP for onward credited to EPF Members Account.

For TAGTF

All applicants intending to redeem in a Class other than MYR Class and MYR-Hedged Class are required to have a foreign currency account with any financial institution as all transactions relating to the particular foreign currency will ONLY be made transferred via telegraphic transfers.

4. All Funds MODE OF DISTRIBUTION

Unit Holders may choose to receive any distributions declared by either of the following methods:

MODE OF DISTRIBUTION

Unit Holders may choose to receive any distributions declared by either of the following methods:


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(a) reinvestment of the distribution amount into additional Units in the Fund based on the NAV per Unit on the Reinvestment Date. No Sales Charge is imposed; or

(b) cheque sent to the Unit Holder at the last correspondence address given to us; or

(c) electronic payment or telegraphic transfer upon special request by Unit Holders.

Distributions will automatically be re-invested into additional Units of the Fund if: (a) No distribution choice is

made on the account opening form or investment form.

(b) The distribution cheque is returned as unclaimed through the post.

(c) The distribution cheque is uncashed after six (6) months from date of issue.

(d) The distribution amount is less than RM50.00 or such amount determined by the Manager from time to time, and

(e) The investment is made under EPF Members Investment Scheme.

In the absence of instructions to the contrary, distribution income from the Fund will be automatically reinvested, at no charge, into additional Units of that Fund based on the NAV per Unit on the Reinvestment Date.

(a) Reinvestment

For reinvestment, the Units will be created based on the NAV per Unit on the Reinvestment Date. There will not be any additional cost for the reinvestment of those additional Units i.e: no Sales Charge is imposed.

(b) Payout

The distribution will be paid based on the selected payment mode stated in the transaction form received by our head office or business centres. The payout will be based on the latest information maintain in our record.

Distributions will automatically be re-invested into additional Units of the Fund if:

(a) No distribution choice is made on the account opening form or investment form.

(b) The distribution cheque is returned as unclaimed through the post.

(c) The distribution cheque is uncashed after six (6) months from date of issue.

(d) The distribution amount is less than RM50.00 (except for TAGTF, the distribution amount is less than USD/AUD/SGD/EUR/MYR/RMB50.00) or such amount determined by the Manager from time to time, and


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* Any change in distribution instruction must be in writing. If this is done in the last 14 days before the distribution declaration date of the Fund, the change will only take effect from the next distribution point, if any.

Unclaimed Money For distribution cheques which are left unclaimed by Unit Holders upon lapse of the six months’ cheque validity period, the Manager shall reinvest the distribution in the purchase of additional Units of the Fund on their behalf at the NAV per Unit at the end of the validity period provided the Unit Holder still has an account with the Manager. For other cases, the Manager shall retain the moneys for a further six (6) months and if still unclaimed, shall deal with those moneys in accordance with the Unclaimed Moneys Act 1965.

UNIT PRICES AND DISTRIBUTIONS PAYABLE, IF ANY, MAY GO DOWN AS WELL AS UP.

(e) The investment is made under EPF Members Investment Scheme.

In the absence of instructions to the contrary, distribution income from the Fund will be automatically reinvested, at no charge, into additional Units of that Fund based on the NAV per Unit on the Reinvestment Date.

* Any change in distribution instruction must be in writing. If this is done in the last 14 days before the distribution declaration date of the Fund, the change will only take effect from the next distribution point, if any.

Unclaimed Income Distribution For income distribution cheques which remains unclaimed by Unit Holders upon lapse of the six months’ cheque validity period from the date of issuance, the Manager shall reinvest as additional Units into the Fund. The NAV per unit for the reinvestment is based on the next Business Day after the cheque has expired. If the Unit Holder no longer has an account with the Manager, such payment of income distributed will be dealt with in accordance with the requirement of the Unclaimed Moneys Act 1965.

Unclaimed Money Policy Any moneys (other than unclaimed income distribution) payable to/by Unit Holders which remain unclaimed after twelve (12) months from the date of payment will be paid to


23

the Registrar of Unclaimed Moneys by us in accordance with the requirements of the Unclaimed Moneys Act 1965. Unit Holders will have to liaise directly with the Registrar of Unclaimed Moneys to reclaim their moneys.

Consent Statement The Trustees, the Trustees’ delegate (custodian function), the auditor, Henderson Management S.A. and the External Investment Manager have given their consent for the inclusion of their names and statements in the form and context in which they appear in this Master Prospectus and have not withdrawn such consent.

PIMCO Asia Limited has given its consent for the inclusion of the name and information about the Target Fund in the form and context in which they appear in this Master Prospectus and have not withdrawn such consent.

The tax adviser has given its consent for the inclusion of its name and tax adviser’s letter in the form and context in which they appear in this Master Prospectus and have not withdrawn such consent.

UNIT PRICES AND DISTRIBUTIONS PAYABLE, IF ANY, MAY GO DOWN AS WELL AS UP.


TRUSTEE'S REPORT

FOR FINANCIAL YEAR ENDED 30 JUNE 2020

(a)

(b)

(c)

For Maybank Trustees Berhad

[Company No.: 196301000109 (5004-P)]

BERNICE K M LAU

Head, Operations

Kuala Lumpur, Malaysia

Date: 27 August 2020

We have acted as Trustee of TA ASIAN DIVIDEND INCOME FUND ("the Fund") for the financial

year ended 30 June 2020. To the best of our knowledge, TA INVESTMENT MANAGEMENT

BERHAD ("the Manager") has managed the Fund in the financial year under review in

accordance with the following:

Valuation and pricing of the Fund are carried out in accordance with the deeds and any

regulatory requirement; and

Creation and cancellation of units are carried out in accordance with the deeds and any

regulatory requirement.

Limitations imposed on the investment powers of the Manager under the deed, securities

laws and Guidelines on Unit Trust Funds;

We are of the view that the distributions are consistent with the objectives and distribution policy

of the Fund.

Total income distributions of 1.70 sen per unit (gross) have been declared to the unitholders of

the Fund for the financial year ended 30 June 2020.

24


STATEMENT BY THE MANAGER

On behalf of the Manager,

CHOO SWEE KEE

Kuala Lumpur, Malaysia


We, CHOO SWEE KEE and MOHAMMED A'REEFF BIN ABDUL KHALID, being two of the

Directors of TA INVESTMENT MANAGEMENT BERHAD, do hereby state that, in the opinion of

the Manager, the accompanying financial statements set out on pages 29 to 60, are drawn up so

as to give a true and fair view of the financial position of TA ASIAN DIVIDEND INCOME FUND

as at 30 June 2020 and of its financial performance and cash flows for the financial year ended

on that date in accordance with Malaysian Financial Reporting Standards and International

Financial Reporting Standards.

MOHAMMED A'REEFF BIN ABDUL KHALID

25


(Established in Malaysia)

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

TO THE UNITHOLDERS OF TA ASIAN DIVIDEND INCOME FUND

INDEPENDENT AUDITORS’ REPORT

We have audited the financial statements of TA Asian Dividend Income Fund, which comprise the

statement of financial position as at 30 June 2020, and the statement of comprehensive income,

statement of changes in net asset value 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 29 to 60.

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

of the Fund as at 30 June 2020, and of its financial performance and its cash flows for the year then

ended in accordance with Malaysian Financial Reporting Standards and International Financial

Reporting Standards.

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

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

the Auditors’ Responsibilities for the Audit of the Financial Statements section of our auditors’ 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 and Manager 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’ International Code of Ethics for Professional

Accountants (including International Independence Standards) (“IESBA Code”), and we have fulfilled

our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.

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

information included in the Annual Report of the Fund, but does not include the financial statements of

the Fund and our auditors’ report thereon.

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

express any form of assurance conclusion thereon.

26



(Continued)

Information Other than the Financial Statements and Auditors’ Report Thereon

(Continued)

Responsibilities of the Manager and Trustee for the Financial Statements

Auditors’ Responsibilities for the Audit of the Financial Statements

•

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

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

the financial statements of the Fund or our knowledge obtained in the audit, or otherwise appears to be

materially misstated. If, based on the work we have performed, we conclude that there is a material

misstatement of the other information, we are required to report that fact. We have nothing to report in

this regard.

The Manager of the Fund is responsible for the preparation of 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. 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 the financial statements.

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

the Fund to continue as a going concern, disclosing, as applicable, matters related to going concern

and using the going concern basis of accounting unless the Manager either intend to liquidate the Fund

or to cease operations, or have no realistic alternative but to do so.

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

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

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

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

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

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

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

the basis of these financial statements.

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

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

throughout the audit. We also:



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

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

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

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

from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or

the override of internal control.

27



(Continued)

Auditors’ Responsibilities for the Audit of the Financial Statements (Continued)

•

•

•

•

Other Matter

KPMG PLT Chua See Guan

(LLP0010081-LCA & AF 0758) Approval Number: 03169/02/2021 J

Chartered Accountants Chartered Accountant

Petaling Jaya, Selangor


This report is made solely to the unit holders 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.

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 internal control of the Fund.

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 ability of the Fund 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.

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 gives a true and fair view.



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.

28


STATEMENT OF COMPREHENSIVE INCOME

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020

2020 2019

Note RM RM

(LOSS)/INCOME

Dividend income 4,729,570 5,225,344

Interest income from deposit with financial institution 45,011 44,751

Net (loss)/gain on:

- financial assets at fair value through

profit or loss ("FVTPL") 6 (10,497,305) 661,614

(5,722,724) 5,931,709

EXPENSES

Manager's fee 3 462,192 508,474

Trustee's fee 4 38,796 54,099

Auditors' remuneration 6,000 6,000

Tax agent's fee 3,250 3,500

Investment committee's remuneration 7,200 7,200

Administrative fees and expenses 9,090 13,126

526,528 592,399

Net (loss)/income before tax (6,249,252) 5,339,310

Less: Income tax expense 5 - -

Net (loss)/income after tax, representing total

comprehensive (loss)/income for the financial year (6,249,252) 5,339,310

Net (loss)/income after tax is made up of the

following:

- Net realised income 10(b) 4,013,927 4,769,825

- Net unrealised (loss)/income 10(c) (10,263,179) 569,485

(6,249,252) 5,339,310

Distribution for the financial year:

Net distribution 9 3,871,327 4,698,921

Gross/net distribution per units (sen) 9 1.7000 1.9000

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

29


TA ASIAN DIVIDEND INCOME FUND

STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2020

2020 2019

Note RM RM

ASSETS

Investment 6 55,636,528 77,042,289

Deposit with financial institution 7 988,159 938,544

Interest receivable 51 224

Amount due from the Manager 8 28,401 3,966,805

Amount due from the Dealer 1,531,187 -

Other receivables 97,173 134,178

Cash at banks 57,125 249,860 TOTAL ASSETS 58,338,624 82,331,900

LIABILITIES

Amount due to the Manager 8 95,484 545,809

Amount due to Trustee 2,715 3,290

Other payables and accruals 14,000 11,300

TOTAL LIABILITIES 112,199 560,399

EQUITY

Unitholders' capital 10(a) 119,334,636 132,759,133

Accumulated losses 10(b),(c) (61,108,211) (50,987,632)

NET ASSET VALUE ("NAV")

ATTRIBUTABLE TO UNITHOLDERS 58,226,425 81,771,501

TOTAL EQUITY AND LIABILITIES 58,338,624 82,331,900

NUMBER OF UNITS IN CIRCULATION 10(a) 202,296,557 243,621,800

NAV PER UNIT 0.2878 0.3356


30



STATEMENT OF CHANGES IN NET ASSET VALUE ("NAV")


Accumulated

Unitholders' losses

capital Note 10(b) Total

Note 10(a) and (c) NAV

RM RM RM

At 1 July 2018 140,928,480 (51,628,021) 89,300,459

Total comprehensive income for the

financial year - 5,339,310 5,339,310

Creation of units 16,393,357 - 16,393,357

Reinvestment of units 4,681,489 - 4,681,489

Cancellation of units (29,244,193) - (29,244,193)

Distribution (Note 9) - (4,698,921) (4,698,921)

At 30 June 2019 132,759,133 (50,987,632) 81,771,501

At 1 July 2019 132,759,133 (50,987,632) 81,771,501

Total comprehensive loss for the

financial year - (6,249,252) (6,249,252)

Creation of units 27,971,539 - 27,971,539

Reinvestment of units 3,857,003 - 3,857,003

Cancellation of units (45,253,039) - (45,253,039)

Distribution (Note 9) - (3,871,327) (3,871,327)

At 30 June 2020 119,334,636 (61,108,211) 58,226,425


31



STATEMENT OF CASH FLOWS


2020 2019

RM RM

CASH FLOWS FROM OPERATING AND

INVESTING ACTIVITIES

Proceeds from sales of investment 16,478,171 14,737,462

Purchases of investment (7,100,902) (3,925,006)

Dividend received 4,729,570 5,225,344

Interest received 45,184 44,919

Manager's fee paid (444,010) (532,319)

Trustee's fee paid (39,371) (56,655)

Payments for other fees and expenses (22,840) (5,200)

Net cash used in operating and investing activities 13,645,802 15,488,545

CASH FLOWS FROM FINANCING ACTIVITIES

Cash received from units created 31,909,943 12,566,448

Cash paid on units cancelled (45,684,541) (29,138,835)

Cash distribution paid (14,324) (17,432)

Net cash from financing activities (13,788,922) (16,589,819)

NET DECREASE IN CASH

AND CASH EQUIVALENTS (143,120) (1,101,274)

CASH AND CASH EQUIVALENTS AT THE

BEGINNING OF THE FINANCIAL YEAR 1,188,404 2,289,678

CASH AND CASH EQUIVALENTS AT THE

END OF THE FINANCIAL YEAR 1,045,284 1,188,404

CASH AND CASH EQUIVALENTS COMPRISE:

Cash at banks 57,125 249,860

Deposit with financial institution 988,159 938,544

Cash and cash equivalents 1,045,284 1,188,404


32


NOTES TO THE FINANCIAL STATEMENTS


1. THE FUND, THE MANAGER AND THEIR PRINCIPAL ACTIVITIES

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of Preparation

(a) Statement of Compliance

TA Asian Dividend Income Fund ("the Fund") was constituted pursuant to the execution of a

Deed of Trust, First Supplemental Deed and Second Supplemental Deed ("the Deeds"),

dated 26 June 2007, 28 September 2009 and 8 April 2011 respectively, between the

Manager, TA Investment Management Berhad, the Trustee, Maybank Trustees Berhad and

the registered holders of the Fund.

The principal activity of the Fund is to invest in "Permitted Investments" as defined under

Division 7.1 of the Deed, which include all types of collective investment schemes including

unlisted unit trusts that are regulated and registered/authorised/approved by the relevant

authorities in their home jurisdiction and money market instruments. The Fund commenced

operations on 15 August 2007 and will continue its operations until terminated by the

Manager or the Trustee as provided under Part 12 of the Deed.

The Manager, TA Investment Management Berhad, a company incorporated in Malaysia, is a

wholly-owned subsidiary of TA Securities Holdings Berhad. Its ultimate holding company is

TA Enterprise Berhad, a company listed on the Main Market of Bursa Malaysia Securities

Berhad. Its principal activities are the establishment and management of unit trust funds and

fund management. The Manager is licensed to carry out dealing in securities and fund

management activities under the Capital Markets and Services Act 2007.

The financial statements were authorised for issue by the Board of Directors of the Manager

in accordance with a resolution on 27 August 2020.

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

Malaysian Financial Reporting Standards ("MFRS") and International Financial

Reporting Standards ("IFRS"), collectively known as the "Standards".

The following are accounting standards, amendments and interpretations of the

MFRS that have been issued by the Malaysian Accounting Standards Board

(“MASB”) but have not been adopted by the Fund:

33


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.1 Basis of Preparation (contd.)

(a) Statement of Compliance (contd.)

•

•

•

•

•

•

•

•

•

•

•

•

•

•

Amendments to MFRS 137, Provisions, Contingent Liabilities and Contingent

Assets − Onerous Contracts − Cost of Fulfilling a Contract

Amendments to MFRS 141, Agriculture (Annual Improvements to MFRS

Standards 2018−2020)

MFRSs, Interpretations and amendments effective for annual periods

beginning on or after a date yet to be confirmedAmendments to MFRS 10, Consolidated Financial Statements and MFRS 128,

Investments in Associates and Joint Ventures – Sale or Contribution of Assets

between an Investor and its Associate or Joint Venture

Amendments to MFRS 1, First-time Adoption of Malaysian Financial Reporting

Standards (Annual Improvements to MFRS Standards 2018−2020)

Amendments to MFRS 3, Business Combinations – Reference to the

Conceptual Framework

Amendments to MFRS 9, Financial Instruments (Annual Improvements to

MFRS Standards 2018−2020)

Amendments to Illustrative Examples accompanying MFRS 16, Leases (Annual

Improvements to MFRS Standards 2018−2020)

Amendments to MFRS 101, Presentation of Financial Statements –

Classification of Liabilities as Current or Non-current

Amendments to MFRS 116, Property, Plant and Equipment − Proceeds before

Intended Use

Amendments to MFRS 9, Financial Instruments , MFRS 139, Financial

Instruments: Recognition and Measurement and MFRS 7, Financial

Instruments: Disclosures – Interest Rate Benchmark Reform

MFRSs, interpretations and amendments effective for annual periods

beginning on or after 1 June 2020 Amendment to MFRS 16, Leases – Covid-19-Related Rent Concessions


beginning on or after 1 January 2023MFRS 17, Insurance Contracts


beginning on or after 1 January 2022


beginning on or after 1 January 2020Amendments to MFRS 3, Business Combinations – Definition of a Business

Amendments to MFRS 101, Presentation of Financial Statements and MFRS

108, Accounting Policies, Changes in Accounting Estimates and Errors –

Definition of Material

34



2.1 Basis of Preparation (contd.)

(a) Statement of Compliance (contd.)

•

•

•

(b) Basis of measurement

(c) Functional and presentation currency

2.2 Significant Accounting Policies

(a) Financial Instruments

(i) Recognition and initial measurement

from the annual period beginning on 1 July 2023 for those amendments that are

effective for annual periods beginning on or after 1 January 2023, except for

MFRS 17 which is not applicable to the Fund.

The accounting policies set out below have been applied consistently to the periods

presented in these financial statements, unless otherwise stated.

A financial asset or a financial liability is recognised in the statement of financial

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

provisions of the instrument.


effective for annual periods beginning on or after 1 January 2022, except for

amendments to MFRS 3 and MFRS 141 which are not applicable to the Fund.

The initial application of the abovementioned accounting standards, amendments or

interpretations is not expected to have any material impact to the financial statements

of the Fund.

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

unless otherwise indicated in Note 2.2.

The financial statements are presented in Ringgit Malaysia ("RM"), which is the

Fund's functional currency.

The Fund plans to adopt the abovementioned accounting standards, amendments

and interpretations:


effective for annual periods beginning on or after 1 January 2020 and 1 June

2020, except for Amendments to MFRS 3 which is not applicable to the Fund.

35



2.2 Significant Accounting Policies (contd.)

(a) Financial Instruments (contd.)

(i) Recognition and initial measurement (contd.)

(ii) Derecognition and offsetting

(iii) Financial instrument categories and subsequent measurement

A financial asset is derecognised when the asset is disposed and the

contractual right to receive cash flows from the asset has expired. On

derecognition of a financial asset, the difference between the carrying amount

and the sum of the consideration received is recognised in profit or loss.

A financial liability or part of it is derecognised when, and only when, the

obligation specified in the contract is discharged, cancelled or expires. A

financial liability is also derecognised when its terms are modified and the cash

flows of the modified liability are substantially different, in which case, a new

financial liability based on modified terms is recognised at fair value. On

derecognition of a financial liability, the difference between the carrying amount

of the financial liability extinguished or transferred to another party and the

consideration paid, including any non-cash assets transferred or liabilities

assumed, is recognised in profit or loss.

Financial assets and liabilities are offset and the net amount reported in the

financial statement when there is a legally enforceable right to offset the

recognised amounts and there is an intention to settle on a net basis or realise

the asset and settle the liability simultaneously.

The Fund determines the classification of its financial assets at initial

recognition, and the categories include financial assets at FVTPL and amortised

cost.

A financial asset (unless it is a trade receivable without significant financing

component) or a financial liability is initially measured at fair value plus or

minus, for an item not at fair value through profit or loss, transaction costs that

are directly attributable to its acquisition or issuance. A trade receivable without

a significant financing component is initially measured at the transaction price.

All financial assets, except for those measured at fair value through profit or

loss are subject to impairment assessment (see Note 2.2(b)).

36




(a) Financial Instruments (contd.)

(iii) Financial instrument categories and subsequent measurement (contd.)

Fair value through profit or loss

Amortised cost

(b) Impairment

Financial assets

The Fund recognises loss allowances for expected credit losses on financial assets

measured at amortised cost. Expected credit losses are a probability-weighted

estimate of credit lossess.

All financial assets not measured at amortised cost or fair value through other

comprehensive income are measured at fair value through profit or loss. On

initial recognition, the Fund may irrevocably designate a financial asset that

otherwise meets the requirements to be measured at amortised cost or at

fair value through other comprehensive income as at fair value through

profit or loss if doing so eliminates or significantly reduces an

accounting mismatch that would otherwise arise.

Financial assets categorised as fair value through profit or loss are

subsequently measured at their fair value. Net gains or losses, including any

interest or dividend income, are recognised in profit or loss.

All financial assets, except for those measured at fair value through profit or

loss are subject to impairment assessment (see Note 2.2(b)).

Amortised cost category comprises financial assets that are held within a

business model whose objective is to hold assets to collect contractual cash

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

are solely payments of principal and interest on the principal amount

outstanding. The financial assets are not designated as fair value through

profit or loss. Subsequent to initial recognition, these financial assets are

measured at amortised cost using the effective interest method. The

amortised cost is reduced by impairment losses. Interest income, foreign

exchange gains and losses and impairment losses are recognised in profit and

loss. Any gain or loss on derecognition is recognised in profit or loss.

Interest income is recognised by applying effective interest rate to the

gross carrying amount except for credit impaired financial assets (see Note

2.2(b)) where the effective interest rate is applied to the amortised cost.

37




(b) Impairment (contd.)

Financial assets (contd.)

(c) Classification of Realised and Unrealised Gains and Losses

An impairment loss in respect of financial assets measured at amortised cost is

recognised in profit or loss and the carrying amount of the asset is reduced through

the use of an allowance account.

The gross carrying amount of a financial asset is written off (either partially or full) to

the extent that there is no realistic prospect of recovery. This is generally the case

when the Fund determines that the obligor does not have assets or sources of

income that could generate sufficient cash flows to pay the amounts subject to the

write-off. However, financial assets that are written off could still be subject to

enforcement activities in order to comply with the Fund’s procedures for recovery of

amounts due.

When determining whether the credit risk of a financial asset has increased

significantly since initial recognition and when estimating expected credit loss, the

Fund considers reasonable and supportable information that is relevant and available

without undue cost or effort. This includes both quantitative and qualitative

information and analysis, based on the Fund's historical experience and informed

credit assessment and including forward-looking information, where applicable.

The Fund measures loss allowances at an amount equal to lifetime expected credit

loss, except for debt securities, if any, that are determined to have low credit risk at

the reporting date, cash and bank balance and other debt securities for which credit

risk has not increased significantly since initial recognition, which are measured at 12-

month expected credit loss.

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

instruments for the year and from reversal of prior year's unrealised gains and losses

for financial instruments which were realised (i.e. sold, redeemed or matured) during

the financial year.

Lifetime expected credit losses are the expected credit losses that result from all

possible default events over the expected life of the asset, while 12-month expected

credit losses are the portion of expected credit losses that result from default events

that are possible within the 12 months after the reporting date. The maximum period

considered when estimating expected credit losses is the maximum contractual

period over which the Fund is exposed to credit risk.

38




(c) Classification of Realised and Unrealised Gains and Losses (contd.)

(d) Financial Liabilities

Amortised cost

(e) Foreign Currency Transactions

(f) Unitholders’ Capital

Interest expense and foreign exchange gains and losses are recognised in the profit

or loss. Any gains or losses on derecognition are also recognised in the profit or loss.

Transactions in foreign currencies are translated to the functional currency of the

Fund at exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the end of the

reporting period are retranslated to the functional currency at the exchange rate at

that date.

Non-monetary assets and liabilities denominated in foreign currencies are not

retranslated at the end of the reporting date except for those that are measured at

fair value are retranslated to the functional currency at the exchange rate at the date

that the fair value was determined.

Foreign currency differences arising on retranslation are recognised in profit or loss,

except for differences arising on the retranslation of equity instruments where they

are measured at fair value through other comprehensive income or a financial

instrument designated as a hedge of currency risk, which are recognised in other

comprehensive income.

Realised gains and losses on disposal of financial instruments classified as part of

'net gain/loss on financial instruments at FVTPL' are calculated using weighted

average method. They represent the difference between an instrument's initial

carrying amount, determined on a weighted average cost basis and disposal amount.

Financial liabilities not categorised as fair value through profit or loss are

subsequently measured at amortised cost using the effective interest method.

The unitholders' capital of the Fund is classified as an equity instrument.

39




(f) Unitholders’ Capital (contd.)

(g) Distribution

(h) Cash and Cash Equivalents

(i) Income Recognition

(j) Income Tax

Cash and cash equivalents comprise cash at banks and short-term deposits with

financial institutions that are readily convertible to known amount of cash and which

are subject to an insignificant risk of changes in value.

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

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

the fair value of consideration received or receivable.

Dividend income is recognised when the Fund's right to receive payment is

established.

Interest income is recognised using the effective interest rate method.

Current tax assets or liabilities position as at reporting date are measured at the net

amount expected to be recovered from or paid to the tax authorities. The tax rates

and tax laws used to compute the tax expense for the financial year are those that

are enacted or substantively enacted by the reporting date.

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.

Distribution is at the discretion of the Fund. A distribution to the Fund's unitholders is

accounted for as a deduction from realised reserves except where distribution is

sourced out of distribution equalisation which is accounted for as a deduction from

unitholders' capital. A proposed distribution is recognised as a liability in the period in

which it is approved.

Distribution equalisation represents the average distributable amount included in the

creation and cancellation prices of units. This amount is either refunded to

unitholders by way of distribution and/or adjusted accordingly when units are

cancelled.

40




(j) Income Tax (contd.)

(k) Segment Reporting

(l) Significant Accounting Estimates and Judgments

Deferred tax is provided for, using the liability method, on taxable temporary

differences at the reporting date between the tax bases of assets and liabilities and

their carrying amounts in the financial statements. In principle, deferred tax liabilities

are recognised for all taxable temporary differences and deferred tax assets are

recognised for all deductible temporary differences to the extent that it is probable

that future taxable profits will be available against which the temporary difference can

be utilised.

The preparation of the Fund's financial statements requires the Manager to make

judgments, estimates and assumptions that affect the reported amounts of revenues,

expenses, assets and liabilities, and the disclosure of contingent liabilities at the

reporting date. However, uncertainty about these assumptions and estimates could

result in outcomes that could require a material adjustment to the carrying amount of

the asset or liability in the future.

The Manager classifies its collective investment scheme as financial assets at

FVTPL as the Fund is an open-funded that may sell its investments in the short-term

for profit-taking or to meet unitholders' redemptions.

No other 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.

For management purposes, the Fund is managed under two main portfolios, namely

collective investement scheme and money market instruments. Each segment

engages in separate investing activities and the operating results are regularly

reviewed by the Investment Manager and Investment Committee. The Investment

Committee assumes the role of chief operating decision maker, for performance

assessment purposes and to make decisions about resources allocated to each

investment segment.

41


3. MANAGER'S FEE

4. TRUSTEE'S FEE

5. INCOME TAX EXPENSE

2020 2019

RM RM

Net (loss)/income before tax (6,249,252) 5,339,310

Taxation at Malaysian statutory rate of 24% (1,499,821) 1,281,434

Effects of interest and other income not subject to tax (1,145,899) (1,436,264)

Effects of losses/expenses not deductible for tax purposes 2,533,354 31,356

Restriction on tax deductible expenses for unit trust funds 112,366 123,474

Income tax expense for the financial year - -

The tax charges for the financial year is in relation to the taxable income earned by the Fund

after deducting tax allowable expenses. In accordance with Schedule 6 of the Income Tax Act

1967, interest income earned by the Fund is exempted from Malaysian tax.

Income tax is calculated at the Malaysian statutory tax rate of 24% of the taxable profit for the

financial year.

The Manager's fee is computed on daily basis at 1.8% (2019: 1.8%) per annum of the NAV of

the Fund, net of Manager's fee rebates of 1.2% (2019: 1.2%) per annum earned from the

Manager and a dealer, on the Fund's NAV of investment in other collective investment

scheme, as offered to and agreed by the Trustee and the Manager.

A reconciliation of income tax expense applicable to net (loss)/income before tax at the

statutory income tax rate to income tax expense at the effective income tax rate of the Fund

is as follows:

Trustee's fee is computed on a daily basis at 0.055% (01.01.2019-30.06.2019: 0.055%;

01.07.2018-31.12.2018: 0.08%) per annum of the NAV of the Fund, subject to minimum of

RM12,000 (2019: RM12,000) per annum.

42


6. INVESTMENT

2020 2019

RM RM

Financial assets at FVTPL:

Collective investment scheme outside Malaysia 55,636,528 77,042,289

Net (loss)/gain on financial assets at FVTPL comprises:

Net realised (loss)/gain on disposals (234,126) 92,129

Net unrealised (loss)/gain on changes in fair value (10,263,179) 569,485

(10,497,305) 661,614

Financial assets at FVTPL as at 30 June 2020 are as detailed below:

Collective investment scheme outside Malaysia

Name of Collective Quantity Cost Fair Value % of NAV

Investment Scheme Unit RM RM %

Janus Henderson Horizon

Fund - Asian Dividend

Income Fund 1,526,093 64,069,395 55,636,528 95.55

TOTAL COLLECTIVE

INVESTMENT SCHEME

OUTSIDE MALAYSIA 1,526,093 64,069,395 55,636,528 95.55

DEFICIT OF FAIR VALUE OVER COST (8,432,867)

Janus Henderson Horizon Fund-Asian Dividend Income is a sub-fund of Janus Henderson

Horizon Fund, an open-ended investment company incorporated in Luxembourg as a Societe

d'Investissement A Capital Variable ("SICAV"). The SICAV was incorporated under

Luxembourg law and is a recognised Collective Investment Scheme under section 264 of the

United Kingdom's Financial Services and Markets Act, 2000.

The management company of the funds is Henderson Management (Luxembourg) S.A., a

company incorporated in Luxembourg. The investment manager and distributor of the funds

is Henderson Global Investors Limited, a company incorporated in the United Kingdom.

43


7. DEPOSIT WITH FINANCIAL INSTITUTION

2020 2019

RM RM

These are placements with:

- Licensed banks 988,159 938,544

2020 2019 2020 2019

Short-term placements 1.90 2.90 1 1

8. AMOUNT DUE FROM/(TO) THE MANAGER

9. DISTRIBUTION

Distributions paid to unitholders during the financial year are as follows:

Gross Net Net

Units In Distribution Distribution Distribution

Declaration Dates Circulation Per Unit Per Unit Amount

(Sen) (Sen) (RM)

31.07.2019 246,828,356 0.50 0.50 1,234,142

31.10.2019 232,660,709 0.60 0.60 1,395,964

31.01.2020 208,785,603 0.30 0.30 626,357

30.04.2020 204,954,823 0.30 0.30 614,864

1.70 1.70 3,871,327

Maturity

Average Remaining

(Days)

WAEIR

Amount due from the Manager relates to amount receivable from the Manager arising from

creation of units of RM4,693 (2019: RM3,940,981) and rebate of Manager's fee of RM23,708

(2019: RM25,824) at the end of the financial year. Amount due to the Manager relates to

amount payable to the Manager arising from cancellation of units of RM6,619 (2019:

RM438,121) and accruals for Manager's fee of RM88,865 (2019: RM107,688) at the end of

the financial year. The normal credit term for creation/cancellation of units is 10 days (2019:

10 days), the normal credit term for Manager's fee is 30 days (2019: 30 days) and the rebate

of Manager's fee is receivable on a quarterly basis.

(% p.a.)

After the end of the reporting period, a gross income distribution of 0.50 sen was declared to

the registered unit holders of the Funds as at 31 July 2020.

The weighted average effective interest rate ("WAEIR") per annum and average maturity of

deposit with financial institution as at the reporting date are as follows:

44


9. DISTRIBUTION (CONTD.)

Distributions to unitholders were made from the following sources:

2020 2019

RM RM

Dividend income 4,222,550 4,949,166

Interest income from deposits 33,964 36,946

Net realised (loss)/gain on sale of investment (10,201) 166,501

4,246,313 5,152,613

Less: Expenses (374,986) (453,692)

Distribution out of realised reserve 3,871,327 4,698,921

Analysed as:

Reinvestment of units 3,857,003 4,681,489

Cash distribution 14,324 17,432

3,871,327 4,698,921

Final distribution:

Gross/net distribution per unit (sen) 1.7000 1.9000

10. NET ASSET VALUE ATTRIBUTABLE TO UNITHOLDERS

2020 2019

Note RM RM

Unitholders' capital (a) 119,334,636 132,759,133

Accumulated (losses)/reserves

- Realised losses (b) (52,751,577) (52,894,177) - Unrealised (losses)/reserves (c) (8,356,634) 1,906,545

58,226,425 81,771,501

(a) Unitholders' capital

No of units RM No of units RM

At beginning of the

financial year 243,621,800 132,759,133 268,208,435 140,928,480

Creation of units 87,262,017 27,971,539 49,932,704 16,393,357

Reinvestment of units 12,266,507 3,857,003 14,532,633 4,681,489

Cancellation of units (140,853,767) (45,253,039) (89,051,972) (29,244,193)

At end of the

financial year 202,296,557 119,334,636 243,621,800 132,759,133

20192020

45


10. NET ASSET VALUE ATTRIBUTABLE TO UNITHOLDERS (CONTD.)

(b) Realised losses

2020 2019

RM RM

At beginning of the financial year (52,894,177) (52,965,081)

Net realised income for the financial year 4,013,927 4,769,825

Distribution out of realised reserve (Note 9) (3,871,327) (4,698,921)

Net increase in realised reserves for the

financial year 142,600 70,904

At end of the financial year (52,751,577) (52,894,177)

(c) Unrealised (losses)/reserve

2020 2019

RM RM

At beginning of the financial year 1,906,545 1,337,060

Net unrealised (loss)/income for the financial year (10,263,179) 569,485

At end of the financial year (8,356,634) 1,906,545

11. TRANSACTIONS WITH DEALER

Percentage

to total

Value of value of

Name of Dealer trade trade

RM %

Janus Henderson Investors Ltd 25,131,617 100.00

12. MANAGEMENT EXPENSE AND PORTFOLIO TURNOVER RATIOS

(a) Management Expense Ratio

(b) Portfolio Turnover Ratio

The portfolio turnover ratio for the financial year ended 30 June 2020 was 0.18 times

(2019: 0.12 times). This ratio represents the average of the total acquisitions and

disposals of the Fund for the financial year over the average NAV of the Fund for the

financial year calculated on a daily basis.

The management expense ratio for the financial year ended 30 June 2020 was 0.75%

(2019: 0.74%). This ratio represents total management expenses expressed as an

annualised percentage of the Fund's average NAV, calculated on a daily basis.

Details of transactions with the dealer during the financial year are as follow:

46


13.SEGMENT INFORMATION

-

- A portfolio of money market instruments.

The segment information is presented below:

Collective Money Collective Money

investment market investment market

scheme portfolio Total scheme portfolio Total

RM RM RM RM RM RM

Dividend income 4,729,570 - 4,729,570 5,225,344 - 5,225,344

Interest income - 45,011 45,011 - 44,751 44,751

Net (loss)/gain on

financial assets

at FVTPL (10,497,305) - (10,497,305) 661,614 - 661,614

Total segment

operating (loss)/

income for the financial year (5,767,735) 45,011 (5,722,724) 5,886,958 44,751 5,931,709

Investment 55,636,528 - 55,636,528 77,042,289 - 77,042,289

Amount due

from the

Dealer 1,531,187 - 1,531,187 - - -

Deposit with

financial

institution - 988,159 988,159 - 938,544 938,544

Other assets - 51 51 - 224 224

Total segment assets 57,167,715 988,210 58,155,925 77,042,289 938,768 77,981,057

Other liabilities - - - - - -

Total segmentliabilities - - - - - -

There was no transaction between operating segments during the financial year.

2020 2019

A portfolio of collective investment schemes; and

The Manager and the Investment Committee of the Fund are responsible for allocating

resources available to the Fund in accordance with the overall investment strategies as set

out in the investment objective and policy. The Fund is managed by two segments:

The investment objective is to provide income and long-term capital appreciation by investing

in a collective investment scheme which invests mainly in a portfolio of Asian stock. There

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

47


13. SEGMENT INFORMATION (CONTD.)

2020 2019

RM RM

Net reportable segment operating (loss)/income (5,722,724) 5,931,709

Expenses (526,528) (592,399) Net (loss)/income before tax (6,249,252) 5,339,310

Income tax expense - - Net (loss)/income after tax (6,249,252) 5,339,310

2020 2019

RM RM

Total segment assets 58,155,925 77,981,057

Amount due from the Manager 28,401 3,966,805

Other receivables 97,173 134,178

Cash at banks 57,125 249,860 Total assets of the Fund 58,338,624 82,331,900

Total segment liabilities - -

Amount due to the Manager 95,484 545,809

Amount due to Trustee 2,715 3,290

Other payables and accruals 14,000 11,300 Total liabilities of the Fund 112,199 560,399

14. FINANCIAL INSTRUMENTS

(a) Classification of financial instruments

Expenses of the Fund are not considered part of the performance of any operating segment.

The following table provides a reconciliation between the net reportable segment

(loss)/income and operating (loss)/income:

In addition, certain assets and liabilities are not considered to be part of the total assets or

liabilities of the operating segments. The following table provides a reconciliation between the

reportable total segment assets and total segment liabilities and total assets and total

liabilities of the Fund:

The Fund's financial assets and financial liabilities are measured on an ongoing basis

either at fair value or at amortised cost based on their respective classification. The

significant accounting policies in Note 2 describe how the classes of financial instrument

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

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

Fund in the statement of financial position as at the end of reporting period by the class

of financial instrument to which they are assigned, and therefore by the measurement

basis.

48


14. FINANCIAL INSTRUMENTS (CONTD.)

(a) Classification of financial instruments (Contd.)

Financial Financial

Financial assets at liabilities at

assets at amortised amortised

FVTPL cost cost Total

RM RM RM RM

2020

Assets

Investment 55,636,528 - - 55,636,528

Deposit with

financial institution - 988,159 - 988,159

Interest receivable - 51 - 51

Amount due from the

Manager - 28,401 - 28,401

Amount due from the

Dealer 1,531,187 1,531,187

Other receivables - 97,173 - 97,173

Cash at banks - 57,125 - 57,125 Total financial assets 55,636,528 2,702,096 - 58,338,624

Liabilities

Amount due to the

Manager - - 95,484 95,484

Amount due to Trustee - - 2,715 2,715

Other payables and

accruals - - 14,000 14,000 Total financial liabilities - - 112,199 112,199

Net losses

arising from financial

instruments

Dividend income 4,729,570 - - 4,729,570

Interest income from

deposit with


Net loss on financial

assets at FVTPL (10,497,305) - - (10,497,305)

(5,767,735) 45,011 - (5,722,724)

49



(a) Classification of financial instruments (Contd.)

Financial Financial

Financial assets at liabilities at

assets at amortised amortised

FVTPL cost cost Total

2019 RM RM RM RM

Assets

Investment 77,042,289 - - 77,042,289

Deposit with


Interest receivable - 224 - 224

Amount due from the

Manager - 3,966,805 - 3,966,805

Other receivables - 134,178 - 134,178

Cash at banks - 249,860 - 249,860 Total financial assets 77,042,289 5,289,611 - 82,331,900

Liabilities

Amount due to the

Manager - - 545,809 545,809

Amount due to Trustee - - 3,290 3,290

Other payables and

accruals - - 11,300 11,300 Total financial liabilities - - 560,399 560,399

Net gains

arising from financial

instruments

Dividend income 5,225,344 - - 5,225,344

Interest income from

deposit with


Net gain on financial

assets at FVTPL 661,614 - - 661,614

5,886,958 44,751 - 5,931,709

(b) Financial instruments that are carried at fair value

Collective investment scheme

The Fund's financial assets at FVTPL are carried at fair value. The fair values of these

financial assets were determined using prices in active markets for identical assets.

Fair value are determined directly by reference to its published NAV per units on a

preceding day basis at the statement of financial position date.

50



(c)

- Deposit with financial institution

- Interest receivable

- Amount due from/(to) the Manager

- Amount due from the Dealer

- Other receivables

- Cash at banks

- Amount due to Trustee

- Other payables and accruals

(d) Fair value hierarchy

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

Level 2:

Level 3:

Financial assets at Level 1 Level 2 Level 3 Total

FVTPL: RM RM RM RM

2020

Collective investment

scheme outsideMalaysia - 55,636,528 - 55,636,528

2019

Collective investment

scheme outsideMalaysia - 77,042,289 - 77,042,289

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

amounts are reasonable approximation of fair value

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

financial instruments by valuation technique:

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

whose carrying amounts approximate the fair values due to their short maturity or credit

period:

Inputs other than quoted prices included within Level 1 that are observable for

the asset or liability, either directly (i.e. prices) or indirectly (i.e. derived from

prices).

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

(unobservable inputs).

51


15. FINANCIAL RISKS MANAGEMENT OBJECTIVES AND POLICIES

(a) Introduction

(b) Risk management structure

(c) Risk measurement and reporting system

(d) Risk mitigation

Monitoring and controlling risks are primarily set up to be performed based on limits

established by the Manager and the Trustee. These limits reflect the investment strategy

and market environment of the Fund as well as the level of the risk that the Fund is willing

to accept. In addition, the Fund monitors and measures the overall risk bearing capacity

in relation to aggregated risk exposure across all risks type and activities.

The Fund has an investment policy that set out its overall business strategies, its

tolerance for risk and its general risk management philosophy. The Manager also has a

Compliance Department to ensure that the Fund complies with the various regulations

and guidelines as stipulated in its Deed, the Securities Commission's Guidelines on Unit

Trust Funds and the Capital Markets and Services Act 2007.

The Fund's Manager is responsible for identifying and managing risks. The Board of

Directors of the Manager are ultimately responsible for the overall risk management

approach within the Fund.

The Fund maintains investment portfolio in a variety of financial instruments as dictated

by its Trust Deed and investment management strategy.

The Fund is exposed to a variety of risks including market risk (which includes interest

rate risk, equity price risk and currency risk), credit risk and liquidity risk. Whilst these are

the most important types of financial risks inherent in each type of financial instruments,

the Manager and the Trustee would like to highlight that the list does not purport to

constitute an exhaustive list of all the risks inherent in an investment in the Fund.

The Fund's objective in managing risks is the creation and protection of unitholders'

value. Risks is inherent in the Fund's activities, but it is managed through a process of

ongoing identification, measurement and monitoring of risk. Financial risk management is

also carried out through sound internal control systems and adherence to the investments

restrictions as stipulated in the Deed, the Securities Commission's Guidelines on Unit

Trust Funds and the Capital Markets and Services Act 2007.

52


15. FINANCIAL RISKS MANAGEMENT OBJECTIVES AND POLICIES (CONTD.)

(e) Excessive risk concentration

(f) Market risk

(i) Interest rate risk

Interest rate risk sensitivity

As a Feeder Fund, the Fund relies on the risk management activities undertaken by the

Target Fund Manager to avoid or minimise excessive risk concentration.

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

management of the Fund regardless whether it is a unit trust fund or otherwise. It

does not in any way suggest that the Fund will invest in conventional financial

instruments.

The sensitivity is the effect of the assumed changes in interest rates on the net

interest income for one year, based on the floating rate financial assets held at the

end of the reporting period.

Risk concentration indicates the relative exposure of the Fund's performance to

developments affecting a particular industry or geographical location. Concentrations of

risk arise when a number of financial instruments or contracts are entered into with the

same counterparty, or where a number of counterparties are engaged in similar business

activities, or activities in the same geographical region, or have similar economic features

that would cause their abilities to meet contractual obligations to be similarly affected by

changes in economic, political or other conditions. Concentrations of foreign exchange

risk may arise if the Fund has a significant net position in a single foreign currency, or

aggregate net position in several currencies that tend to move together.

Market risk is the risk that the fair value or future cash flows of financial instruments will

fluctuate due to changes in market variables such as interest rate, equity prices and

currency rates. The maximum risk resulting from financial instruments equals their fair

values at the reporting date.

The fund's assets that have an exposure to interest rate as at the financial year end

are not sensitive to interest rate risk as the deposit with financial institution has a

fixed interest rate.

53


15. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD.)

(f) Market risk (Contd.)

(i) Interest rate risk (Contd.)

Interest rate risk exposure

Non-interest

0 - 3 bearing

months instruments Total WAEIR

RM RM RM %

2020

Assets

Investment - 55,636,528 55,636,528

Deposit with

financial institution 988,159 - 988,159 1.90

Other assets - 1,713,937 1,713,937

Total assets 988,159 57,350,465 58,338,624

Liabilities

Other liabilities - 112,199 112,199

Total liabilities - 112,199 112,199

Total interest sensitivity gap 988,159 57,238,266 58,226,425

The following table analyses the Fund's interest rate risk exposure. The Fund's

assets and liabilities are included at fair value and categorised by the earlier of

contractual re-pricing or maturity dates.

54


15. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD.)


(i) Interest rate risk (Contd.)

Interest rate risk exposure (contd.)

Non-interest

0 - 3 bearing

months instruments Total WAEIR

RM RM RM %

2019

Assets

Investment - 77,042,289 77,042,289

Deposit with

financial institution 938,544 - 938,544 2.90

Other assets - 4,351,067 4,351,067

Total assets 938,544 81,393,356 82,331,900

Liabilities

Other liabilities - 560,399 560,399

Total liabilities - 560,399 560,399

Total interest sensitivity gap 938,544 80,832,957 81,771,501

(ii) Equity price risk

Equity price risk sensitivity

Change in Effect Effect

Market Index equity index on income on equity

2020 % RM RM

MSCI All Country Asia Pacific Ex Japan High Dividend Yield Index +5.00 2,781,826 2,781,826

Management's best estimate of the effect on the income for the financial year due to

a reasonably possible change in equity index, with all other variables held constant is

indicated in the table below:

Equity price risk is the risk of unfavourable changes in the fair values of equities as

the result of changes in the level of equity index and the value of individual

investments. The equity price risk exposure arises from the Fund's investment in

collective investment scheme.

55




(ii) Equity price risk (contd.)

Equity price risk sensitivity (contd.)

Change in Effect Effect

Market Index equity index on income on equity

2019 % RM RM

MSCI World/Asia Pacific Ex Japan

High Dividend Yield Index +0.76 585,521 585,521

Equity price risk concentration

RM % of NAV RM % of NAV

Luxembourg 55,636,528 95.55 77,042,289 94.22

(iii) Currency risk

Currency risk sensitivity

The Fund did not have any financial liabilities denominated in foreign currency as at

the statement of financial position date. The following table indicates the currencies to

which the Fund has significant exposure at the statement of financial position date on

its financial assets. The analysis calculates the effect of a reasonably possible

movement of the currency rate against RM on equity and on income with all other

variables held constant.

The following table sets out the Fund's exposure to equity price risk based on its

portfolio of equity instruments (including equity instrument held at FVTPL) as at the

reporting date:

An opposite movement in the index shown above would have resulted in an

equivalent, but opposite impact.

In practice, the actual trading results may differ from the sensitivity analysis above

and the difference could be material.

Currency risk is the risk that the value of financial instruments will fluctuate due to

changes in foreign exchange rate. The Fund invests in collective investment scheme

and money market instrument that are denominated in currencies other than RM.

Accordingly, the value of the Fund's assets may be affected favourably or

unfavourably by fluctuations in currency rates and therefore the Fund will be subject

to foreign exchange risk.

2020 2019

56




(iii) Currency risk (contd.)

Currency risk sensitivity (contd.)

Exchange Effect on

rate as at Change in Effect on equity and

Exchange rate 30 June currency rate income NAV

RM % RM RM

2020

USD/RM 4.2840 +5.00 2,858,591 2,858,591

2019

USD/RM 4.1320 -3.19 -2,463,722 -2,463,722

Currency risk exposure

RM % of NAV RM % of NAV

USD/RM 57,171,824 98.19 77,232,673 94.45

(g) Credit risk

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

loss for the Fund by failing to discharge its obligation. The Fund is exposed to the risk of

credit related losses that can occur as a result of a counterparty or issuer being unable or

unwilling to honour its contractual obligations to make timely payment of interest, principal

and proceeds from realisation of investments. These credit risk exposures exist within

financing relationships, derivatives and other transactions.

The Manager manages the Fund's credit risk by undertaking credit evaluation and close

monitoring of any changes to the issuer/counterparty's credit profile to minimise such risk.

It is the Fund's policy to invest with reputable counterparties. The Manager also closely

monitors the creditworthiness of the Fund's counterparties (e.g. dealer, custodian, bank,

etc.) by reviewing their credit ratings and credit profile.

An opposite movement in the exchange rates shown above would have resulted in an

equivalent, but opposite impact.

The following table sets out the Fund's exposure to foreign currency rate on its

financial assets based on foreign currency net position as at the reporting date.

2020 2019

57



(g) Credit risk (contd.)

Credit risk exposure

Credit quality of financial assets

Rating by

Rating Agency

Short term credit rating of of Malaysia

financial assets not at FVTPL P1 Unrated Total

RM RM RM

2020

Deposit with financial institution 988,159 - 988,159 Interest receivable 51 - 51 Amount due from the Manager - 28,401 28,401 Amount due from the Dealer 1,531,187 1,531,187 Other receivables - 97,173 97,173 Cash at banks 57,125 - 57,125

1,045,335 1,656,761 2,702,096

2019

Deposit with financial institution 938,544 - 938,544 Interest receivable 224 - 224 Amount due from the Manager - 3,966,805 3,966,805 Other receivables - 134,178 134,178 Cash at banks 249,860 - 249,860

1,188,628 4,100,983 5,289,611

(h) Liquidity risk

As at statement of financial position date, the Fund's maximum exposure to credit risk is

represented by the carrying amount of each class of financial assets recognised in the

statement of financial position.

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

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

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

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

Fund is exposed to the risk of cash redemption of its units on a regular basis. Units sold

to unitholders by the Manager are redeemable at the unitholder's option based on the

Fund's NAV per unit at the time of redemption calculated in accordance with the Deed.

It is the Fund's policy that the Manager monitors the Fund's liquidity position on a daily

basis. The Fund also manages its obligation to pay for redemption of units when required

to do so and its overall liquidity risk by requiring a 3-days notice period before

redemption.

58



(h) Liquidity risk (contd.)

Less than

1 month Total

2020 RM RM

Assets

Investment 55,636,528 55,636,528 Deposit with financial institution 988,159 988,159 Other assets 1,713,937 1,713,937 Total undiscounted financial assets 58,338,624 58,338,624

Liabilities

Other liabilities 112,199 112,199 Total undiscounted financial liabilities 112,199 112,199

Equity 58,226,425 58,226,425

Liquidity gap - -

Less than

1 month Total

2019 RM RM

Assets

Investment 77,042,289 77,042,289 Deposit with financial institution 938,544 938,544 Other assets 4,351,067 4,351,067 Total undiscounted financial assets 82,331,900 82,331,900

Liabilities

Other liabilities 560,399 560,399 Total undiscounted financial liabilities 560,399 560,399

Equity 81,771,501 81,771,501

Liquidity gap - -

The Manager's policy is to always maintain a prudent and sufficient level of liquid assets

so as to meet normal operating requirements and expected redemption requests by

unitholders.

The following table summarises the maturity profile of the Fund's unit in issue (classified

as equity instruments) and financial liabilities. The table also analyses the maturity profile

of the Fund's financial assets against the Fund's contractual commitments to provide an

overview of the Fund's liquidity position.

59



(h) Liquidity risk (Contd.)

Notes:

(i) Financial assets

(ii) Financial liabilities

(iii) Equity

16. CAPITAL MANAGEMENT

The maturity grouping is based on the remaining period from the end of the reporting

date to the contractual maturity date. When a counterparty has a choice of when the

amount is to be paid, the liability is allocated to the earliest period in which the Fund

can be expected to pay.

As unitholders can request for redemption on their units by giving the Manager a 3-

days notice period, equity is categorised as having a maturity of "Less than 1 month".

However, the Fund believes that it would be able to liquidate all its investments

should the need arise to satisfy all the redemption requirements of the Fund.

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 NAV from the performance of its investments.

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

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

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

of units.

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

ended 30 June 2020 and 30 June 2019.

Analysis of financial assets at FVTPL into maturity groupings is based on the

expected date on which these assets will be realised. Collective investment scheme

has been included in the "Less than 1 month" category on the assumption that this is

highly liquid investment which can be realised should all of the Fund's unitholders'

capital are required to be redeemed. For other assets, the analysis into maturity

grouping is based on the remaining period from the end of the reporting date to the

contractual maturity date or if earlier, the expected date on which the assets will be

realised.

60


61

Corporate Information

Manager TA Investment Management Berhad (340588-T)

Registered Office 34th Floor, Menara TA One 22 Jalan P. Ramlee 50250 Kuala Lumpur

Board of Directors En. Mohammed A'reeff Bin Abdul Khalid (Non-Independent / Executive Director) Mr. Choo Swee Kee (Non-Independent / Executive Director) Dr. Wong Hong Meng (Independent / Non-Executive Director) Mr. Chew Chin Guan (Independent / Non-Executive Director)

Investment Committee Members

Choo Swee Kee (Non-Independent) Kaladher A/L Govindan (Non-Independent) Dato' Tay Kian Chuan (Independent) Dr. Wong Hong Meng (Independent)

Trustee of the Fund Maybank Trustees Berhad 8th Floor, Menara Maybank 100 Jalan Tun Perak 50050 Kuala Lumpur

Auditor of the Manager and the Fund

KPMG PLT Chartered Accountants Level 10, KPMG Tower 8 First Avenue, Bandar Utama 47800 Petaling Jaya Selangor

Banker Malayan Banking Bhd Ground Floor, Wisma Genting Jalan Sultan Ismail 50250 Kuala Lumpur

Secretaries Chuah Wen Pin (MAICSA 7014581) Tan Kit Yee (MAICSA 7061042)


62

Management Staff Wong Mien Chief Executive Officer

Presley Chua Chung Leong Senior Manager Compliance

Tee Ling Ling Head of Sales & Marketing

Alicia Khor Head of Operations

Investment Team Choo Swee Kee Chief Investment Officer

Jennifer Mak Fong Ching Fund Manager

Lam Chee Mun Fund Manager

Head Office 23rd Floor, Menara TA One 22 Jalan P. Ramlee 50250 Kuala Lumpur

Toll Free: 1-800-38-7147

Tel: (603) 2031 6603

Fax: (603) 2031 4479

Website: http://www.tainvest.com.my

E-mail: [email protected]

Corporate Information (cont’d)

Head Office

MelakaBusiness Centre

PenangBusiness Centre

Kota Kinabalu Kota Kinabalu Business Centre

KuchingBusiness Centre

MiriBusiness Centre

TA Investment Management Berhad23rd Floor, Menara TA One22 Jalan P. Ramlee50250 Kuala LumpurTel: 03-2031 6603 | Fax: 03-2031 4479

57A, Jalan MerdekaTaman Melaka RayaTaman Melaka Raya75000 MelakaTel: 06-288 2687

15-1-8, Bayan PointMedan Kampung Relau11900 Pulau PinangTel: 04-645 9801 | Fax: 04-611 9805

Unit 4-1-02, 1st FloorUnit 4-1-02, 1st FloorBlock 4, Api-Api CentreJalan Centre Point88000 Kota Kinabalu, SabahTel: 088-268 023 | Fax: 088-248 463

L204, 1st FloorJalan Tunku Abdul Rahman93100 Kuching, Sarawak93100 Kuching, SarawakTel: 082-233 203 | Fax: 082-232 203

Lot 1251, 1st Floor, Block 10Centrepoint Commercial Centre (Phase 1)Jalan Melayu98000 Miri, SarawakTel: 085-430 415 | Fax: 085-436 044

1-800-38-7147www.tainvest.com.my

Documents

TA Asian Dividend Income Fund€¦ · TA Asian Dividend Income Fund (For the 6 months ended 31 December 2019) 4 Manager’s Report TA Asian Dividend Income Fund Fund Category/Type