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Annual Report for

AmBond31 March 2020

AmBond

TRUST DIRECTORY

Manager AmFunds Management Berhad

9th & 10th Floor, Bangunan AmBank Group 55 Jalan Raja Chulan 50200 Kuala Lumpur

Board of Directors Jeyaratnam A/L Tamotharam Pillai

Dato’ Mustafa Bin Mohd Nor Tai Terk Lin

Sum Leng Kuang Goh Wee Peng

Investment Committee Sum Leng Kuang

Tai Terk Lin Dato’ Mustafa Bin Mohd Nor

Zainal Abidin Bin Mohd Kassim Goh Wee Peng

Trustee HSBC (Malaysia) Trustee Berhad

Auditors and Reporting Accountants Ernst & Young PLT

Taxation Adviser Deloitte Tax Services Sdn Bhd

AmBond

CONTENTS

1 Manager’s Report

7 Independent Auditor’s Report to the Unitholders

11 Statement of Financial Position

12 Statement of Comprehensive Income

13 Statement of Changes in Equity

14 Statement of Cash Flows

15 Notes to the Financial Statements

45 Statement by the Manager

46 Trustee’s Report

47 Directory

1

MANAGER’S REPORT Dear Unitholders, We are pleased to present you the Manager’s report and the audited accounts of AmBond (“Fund”) for the financial year ended 31 March 2020. Salient Information of the Fund

Name AmBond (“Fund”)

Category/ Type

Bond / Income

Objective AmBond is a medium to long-term bond fund that aims to provide you with a stream of income*. Note: * The Income could be in the form of units or cash. Any material change to the investment objective of the Fund would require Unit Holders’ approval.

Duration The Fund was established on 20 January 2000 and shall exist for as long as it appears to the Manager and the Trustee that it is in the interests of the unitholders for it to continue. In some circumstances, the unitholders can resolve at a meeting to terminate the Fund.

Performance Benchmark

BPAM Corporates All Bond Index (“BPAM Corps All Bond Index”) (obtainable from www.aminvest.com) Note: The risk profile of the Fund may not be the same as the risk profile of the performance benchmark.

Income Distribution Policy

Income distribution (if any) is paid at least twice every year.

Breakdown of Unit Holdings by Size

For the financial year under review, the size of the Fund stood at 511,544,923 units.

Size of holding As at 31 March 2020 As at 31 March 2019

No of units held

Number of unitholders

No of units held

Number of unitholders

5,000 and below 127,459 59 101,414 46

5,001-10,000 190,653 26 160,207 24

10,001-50,000 602,837 29 704,385 37

50,001- 500,000 1,176,919 9 992,088 9

500,001 and above 509,447,055 19 178,379,691 17

2

Fund Performance Data

Portfolio Composition

Details of portfolio composition of the Fund for the financial years as at 31 March are as follows:

FY 2020

%

FY 2019

%

FY 2018

%

Corporate bonds 86.22 54.68 92.43

Malaysian Government bonds - 21.84 -

Quasi - Government bonds 3.25 9.14 -

Money market deposits 10.45 11.30 8.68

Cash, other assets & liabilities 0.08 3.04 -1.11

Total 100.00 100.00 100.00

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

Performance Details

Performance details of the Fund for the financial years ended 31 March are as follows:

FY 2020

FY 2019

FY 2018

Net asset value (RM)* 650,489,102 223,586,799 149,344,701

Units in circulation* 511,544,923 180,337,785 124,916,279

Net asset value per unit (RM)* 1.2716 1.2398 1.1956

Highest net asset value per unit (RM)*

1.3715

1.2558 1.2139

Lowest net asset value per unit (RM)*

1.2404

1.1948

1.1827

Benchmark performance (%) 6.09 6.67 4.93

Total return (%)(1) 5.71 6.51 4.50

- Capital growth (%) 2.56 3.75 1.16

- Income distribution (%) 3.15 2.76 3.34

Gross distribution (sen per unit)

3.91

3.30 3.95

Net distribution (sen per unit) 3.91 3.30 3.95

Management expense ratio (%)(2)

1.04

1.07 1.12

Portfolio turnover ratio (times)(3)

1.41

1.24 0.34

* Above prices and net asset value per unit are shown as ex-distribution. Note: (1) Total return is the annualised return of the Fund for the respective financial

years computed based on the net asset value per unit and net of all fees. (2) Management expenses ratio (“MER”) is calculated based on the total fees and

expenses incurred by the Fund divided by the average fund size calculated on a daily basis. The MER decreased by 0.03% as compared to 1.07% per annum for the financial year ended 31 March 2019 mainly due to increase in average fund size.

(Forward)

3

(3) Portfolio turnover ratio (“PTR”) is calculated based on the average of the total acquisitions and total disposals of investment securities of the Fund divided by the average fund size calculated on a daily basis. The PTR increased by 0.17 times (13.7%) as compared to 1.24 times for the financial year ended 31 March 2019 mainly due to increase in investing activities.

Average Total Return (as at 31 March 2020)

AmBond(a) %

MMGS/ All MGS/

BPAM Corps All Bond Index**(b)

%

One year 5.71 6.09

Three years 5.57 5.89

Five years 5.04 5.36

Ten years 4.36 4.67

Annual Total Return

Financial Years Ended (31 March)

AmBond(a) %

MMGS/ All MGS/

BPAM Corps All Bond Index**(b)

%

2020 5.71 6.09

2019 6.51 6.67

2018 4.50 4.93

2017 4.26 4.38

2016 4.23 4.78

(a) Source: Novagni Analytics and Advisory Sdn Bhd. (b) BPAM Corporates All Bond Index

**Benchmark - from 20 January 2000 to 4 July 2013

• Medium Malaysian Government Securities Index (“MMGS”) - from 5 July 2013 to 30 September 2016

• Quantshop All Malaysian Government Securities (MGS) Index (“All MGS”)

- from 1 October 2016 onwards

• BPAM Corporates All Bond Index (“BPAM Corps All Bond Index”) (obtainable from www.aminvest.com)

The Fund performance is calculated based on the net asset value per unit of the Fund. Average total return of the Fund and its benchmark for a year is computed based on the absolute return for that period annualised over one year.

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

Fund Performance

For the financial year under review, the Fund registered a return of 5.71% comprising of 2.56% capital growth and 3.15% income distribution. Thus, the Fund’s return of 5.71% has underperformed the benchmark’s return of 6.09% by 0.38%. (Forward)

4

As compared with the financial year ended 31 March 2019, the net asset value (“NAV”) per unit of the Fund increased by 2.56% from RM1.2398 to RM1.2716, while units in circulation increased by >100.00% from 180,337,785 units to 511,544,923 units. The line chart below shows comparison between the annual performances of AmBond and its benchmark, MMGS/All MGS/ BPAM Corps All Bond Index, for the financial years ended 31 March.

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

Has the Fund achieved its objective?

The Fund has achieved its objective by providing a stream of income.

Strategies and Policies Employed

For the financial year under review, the Fund invested primarily in bonds with the minimum short-term credit rating of P2 by RAM and long-term credit rating of BBB3 by RAM or its equivalent as rated by a local or global rating agency.

Portfolio Structure

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

As at 31.3.2020

%

As at 31.3.2019

%

Changes

%

Corporate bonds 86.22 54.68 31.54

Malaysian Government bonds - 21.84 -21.84

Quasi - Government bonds 3.25 9.14 -5.89

Money market deposits 10.45 11.30 -0.85

Cash, other assets & liabilities 0.08 3.04 -2.96

Total 100.00 100.00

For the financial year under review, exposure to corporate bonds has increased from 54.68% to 86.22% while holdings in quasi decreased to 3.25%. There was no holding in Malaysia Government bonds. Money markets deposits decreased from 11.30% to 10.45%. Finally, cash, other assets & liabilities decreased from 3.04% to 0.08%.

5

Cross Trades

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

Distribution/ Unit Splits

During the financial year under review, the Fund declared income distributions, detailed as follows:

Date of distribution

Distribution per unit

(sen)

NAV per unit Cum-Distribution

(RM)

NAV per unit Ex-Distribution

(RM)

25-Sep-19 1.46 1.3114 1.2968

23-Mar-20 2.45 1.2989 1.2744

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

State of Affairs

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

Rebates and Soft Commission

Soft commissions received from brokers/dealers are retained by the Manager only if the goods and services provided are in the form of research services that assist in the decision-making process relating to the Fund’s investments. During the financial year under review, the Manager had received on behalf of the Fund, soft commissions as allowed under regulatory requirements to carry out investment management functions for the Fund. These soft commissions received by the Manager are deemed to be beneficial to the unitholders of the Fund.

Market Review

The local bond market had rallied since January to August 2019 on the back of flushing liquidity chasing limited supply onshore and bullish local sentiment apace with global yields racing to the bottom. The market was then on sell-off mode by profit takers in September and October ensued by a rebound in November as investors anticipated Overnight Policy Rate (OPR) cut by Bank Negara Malaysia (BNM) in 1Q2020. These were backed by the unchanged OPR in November’s Monetary Policy Committee (MPC) coupled with surprised 50bps Statutory Reserve Requirement (SRR) reduction and the expectation of slower growth ahead. The Malaysia 3Q2019 Gross Domestic Product (GDP) growth slowed to 4.4% YoY (2Q2019: 4.9). In 2019, BNM had made only one OPR cut of 25bps to 3.00% in May 2019. The cut was widely regarded as pre-emptive easing against global and domestic growth risks. Indeed, on 22 January, BNM cut OPR by 25bps to 2.75%, sending yields down further by 8-18bps. In February, the local bond market continued to rally in tandem with the United States (US) treasuries and in anticipation of another 25bp OPR cut in 2020. The Malaysian Government Securities (MGS) curve parallel shifted downward by 18-35bps in February despite the political turmoil in the country. While foreign flows were affected, the government bonds were seen strongly supported by local investors despite the spike in yields on the day of Tun Mahathir’s resignation as the Prime Minister of Malaysia. Separately, Malaysia’s 4Q2019 real GDP printed a disappointing 3.6%YoY (consensus expectation: 4.5% YoY) dragged down mainly by the sharp contraction in net exports by -9.8% YoY. On sector wise, the Agriculture and Mining suffered contraction in 4Q2029, in line with BNM’s statement on commodity sector supply disruption.

6

Stepping into an anomalous and turbulent month of March, Malaysia experienced a mid-term change in ruling coalition resulting in a new Prime Minister and Cabinet. Political uncertainty took a backseat as the country then swiftly went into lockdown mode as the number of Covid-19 cases spiked. This necessitate the new Government to announce MYR250b fiscal stimulus package in addition to the MYR20b stimulus announced by previous Government on 27 February. The global flight to liquidity snapped the bullish trend in Malaysia Ringgit (MYR) bond markets and panic selling sent Malaysia Government Securities (MGS)/Government Investment Issue (GII) yields soaring 70-100bps across the curve. The MGS/GII market was hit by the combination of foreign selling, bank traders cutting losses, and redemption-driven selling by asset managers. Signs of stabilization returned to the market following BNM’s emergency SRR cut of 100bps on 19 March 2020, and the MGS/GII curves ended the month 20-80bps higher. Despite the massive selloff, the MGS/GII auctions (15-yr MGS, 20-yr GII, 5-year MGS, and 7-year GII) garnered decent bid-to-cover ratios of 2.1-2.9x, underpinned by demand from real money investors attracted to the higher yields. Meanwhile, on 26 March 2020, S&P affirmed Malaysia’ A-/Stable sovereign rating with the expectation that Malaysia would maintain its fiscal consolidation trajectory in the medium term despite higher fiscal deficit in 2020 (from fiscal stimulus and lower oil-related revenue). MYR had weakened from 4.22 to 4.32 against the (US Dollar (USD) (after reaching the high of 4.45 at one point), amid plunging oil prices following the fallout of OPEC+ meeting in early March.

Market Outlook

Bond market sentiments should remain positive due to BNM policy remaining dovish as growth risks are tilted to the downside in 2020 and into 1H2021 which would likely require further OPR cuts in 2020. The quantum of further cuts in OPR rate would depend on:

a) factors surrounding the COVID-19 pandemic as well as; and b) any restart of US-China and/or US-European Union (EU) trade-tensions.

Market liquidity remains ample and demand for fixed income instruments is expected to remain strong despite any concerns on MGS/GII supply.

Additional Information

The following information was updated: 1. Jeyaratnam A/L Tamotharam Pillai was appointed as an Independent, Non-

Executive Chairman for AmFunds Management Berhad with effect from 1st April 2019.

2. Seohan Soo resigned as a Non-Independent, Non-Executive Director for AmFunds Management Berhad with effect from 1st January 2020.

Kuala Lumpur, Malaysia AmFunds Management Berhad 12 June 2020

Independent auditors’ report to the unitholders of

AmBond

Report on the audit of the financial statements

Opinion

Basis for opinion

Independence and other ethical responsibilities

Information other than the financial statements and auditors’ report thereon

We have audited the financial statements of AmBond (“the Fund”), which comprise the statement of financial position as at 31 March 2020, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the financial year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 11 to 44.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Fund as at 31 March 2020, and of its financial performance and cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards.

We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

The Manager is responsible for the other information. The other information comprises the information in the annual report of the Fund, but does not include the financial statements of the Fund and our auditors’ report thereon.

Our opinion on the financial statements of the Fund does not cover the other information and we do not express any form of assurance conclusion thereon.

We are independent of the Fund in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Code of Ethics for Professional Accountants (including International Independence Standards) (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.

7


AmBond (cont’d.)

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

Responsibilities of the Manager and the Trustees for the financial statements

Auditor’s responsibilities for the audit of the financial statements

In connection with our audit of the financial statements of the Fund, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Fund or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is material misstatement of this other information, we are required to report the fact. We have nothing to report in this regard.

The Manager is responsible for the preparation of the financial statements of the Fund that give a true and fair view in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards. The Manager is also responsible for such internal control as the Manager determines is necessary to enable the preparation of financial statements of the Fund that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements of the Fund, the Manager is responsible for assessing the Fund’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Manager either intends to liquidate the Fund or to cease operations, or has no realistic alternative to do so.

The Trustee is responsible for ensuring that the Manager maintains proper accounting and other records as are necessary to enable true and fair presentation of these financial statements.

Our objectives are to obtain reasonable assurance about whether the financial statements of the Fund, as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

8


AmBond (cont’d.)

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

As part of an audit in accordance with the approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the planning and performance of the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements of theFund, whether due to fraud or error, design and perform audit procedures responsive tothose risks, and obtain audit evidence that is sufficient and appropriate to provide a basisfor our opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error, as fraud may involve collusion, forgery, intentionalomissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design auditprocedures that are appropriate in the circumstances, but not for the purpose of expressingan opinion on the effectiveness of the Fund’s internal control.

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

• Conclude on the appropriateness of the Manager’s use of the going concern basis ofaccounting and, based on the audit evidence obtained, whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Fund’s ability tocontinue as a going concern. If we conclude that a material uncertainty exists, we arerequired to draw attention in our auditors’ report to the related disclosures in the financialstatements or, if such disclosures are inadequate, to modify our opinion. Our conclusionsare 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 theFund, including the disclosures, and whether the financial statements of the Fundrepresent the underlying transactions and events in a manner that achieves fairpresentation.

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.

9


AmBond (cont’d.)

Other matters

Ernst & Young PLT Lee Pei Yin

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

Chartered Accountants Chartered Accountant

Kuala Lumpur, Malaysia

12 June 2020

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

10

AmBond

STATEMENT OF FINANCIAL POSITION

AS AT 31 MARCH 2020

2020 2019Note RM RM

ASSETS

Investments 4 582,011,413 191,518,094

Amount due from Manager 5(a) 1,712,026 7,193,985

Deposits with financial institutions 6 67,983,749 25,266,353

Cash at banks 1,834 1,961 TOTAL ASSETS 651,709,022 223,980,393

LIABILITIES

Amount due to Manager 5(b) 957,132 167,181

Amount due to Trustee 7 26,404 7,292

Distributions payable 211,091 188,287

Sundry payables and accrued expenses 25,293 30,834 TOTAL LIABILITIES 1,219,920 393,594

EQUITY

Unitholders’ capital 9(a) 646,663,403 222,984,715

Retained earnings 9(b)(c) 3,825,699 602,084

TOTAL EQUITY 9 650,489,102 223,586,799

TOTAL EQUITY AND LIABILITIES 651,709,022 223,980,393

UNITS IN CIRCULATION 9(a) 511,544,923 180,337,785

NET ASSET VALUE (“NAV”) PER UNIT− EX DISTRIBUTION 127.16 sen 123.98 sen

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

11

AmBond

STATEMENT OF COMPREHENSIVE INCOME

FOR THE FINANCIAL YEAR ENDED 31 MARCH 2020

2020 2019Note RM RM

INVESTMENT INCOME

26,096,497 7,423,487

loss (“FVTPL”) 8 3,622,192 4,344,926

29,718,689 11,768,413

EXPENDITURE

Manager’s fee 5 (6,166,312) (1,508,479)

Trustee’s fee 7 (265,666) (75,424)

Auditors’ remuneration (10,000) (10,000)Tax agent’s fee (4,100) (4,100)

Other expenses (834) (20,890)

(6,446,912) (1,618,893)

Net income before tax 23,271,777 10,149,520 Less: Income tax 11 - - Net income after tax 23,271,777 10,149,520 Other comprehensive income - - Total comprehensive income for the financial year 23,271,777 10,149,520

Total comprehensive income comprises the following:

Realised income 22,905,737 5,959,874

Unrealised gain 366,040 4,189,646

23,271,777 10,149,520

Distribution for the financial year

Net distributions 12 20,048,162 5,022,266

Gross/net distributions per unit (sen) 12 3.91 3.30


Interest income

Net gain from investments:

− Financial assets at fair value through profit or

12

AmBond

STATEMENT OF CHANGES IN EQUITY


(Accumulated

losses)/

Unitholders’ Retained Total

capital earnings equity Note RM RM RM

At 1 April 2018 153,869,871 (4,525,170) 149,344,701

Total comprehensive income

for the financial year - 10,149,520 10,149,520

Creation of units 9(a) 129,549,733 - 129,549,733

Reinvestment of distribution 9(a),12 4,675,496 - 4,675,496

Cancellation of units 9(a) (65,110,385) - (65,110,385)

Distributions 12 - (5,022,266) (5,022,266)Balance at 31 March 2019 222,984,715 602,084 223,586,799

At 1 April 2019 222,984,715 602,084 223,586,799

Total comprehensive income

for the financial year - 23,271,777 23,271,777

Creation of units 9(a) 1,013,219,149 - 1,013,219,149

Reinvestments of distributions 9(a),12 19,675,579 - 19,675,579

Cancellation of units 9(a) (609,216,040) - (609,216,040)

Distributions 12 - (20,048,162) (20,048,162)Balance at 31 March 2020 646,663,403 3,825,699 650,489,102


13

AmBond

STATEMENT OF CASH FLOWS


2020 2019Note RM RM

CASH FLOWS FROM OPERATING AND

INVESTING ACTIVITIES

Proceeds from sale of investments 663,347,300 161,601,450

Interest received 22,076,765 7,704,395

Manager’s fee paid (5,629,999) (1,472,763)

Trustee’s fee paid (246,554) (74,293)

Tax agent’s fee paid (4,100) (4,100)

Payments for other expenses (16,375) (39,523)

Purchase of investments (1,046,198,695) (211,022,230)

Net cash used in operating and

investing activities (366,671,658) (43,307,064)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from creation of units 1,018,701,108 122,368,625 Payments for cancellation of units (608,962,402) (66,390,061)Distribution paid (349,779) (369,982)Net cash generated from financing activities 409,388,927 55,608,582

NET INCREASE IN CASH AND CASH

EQUIVALENTS 42,717,269 12,301,518 CASH AND CASH EQUIVALENTS AT

BEGINNING OF FINANCIAL YEAR 25,268,314 12,966,796 CASH AND CASH EQUIVALENTS AT

END OF FINANCIAL YEAR 67,985,583 25,268,314

Cash and cash equivalents comprise:

Deposits with financial institution 6 67,983,749 25,266,353

Cash at banks 1,834 1,961

67,985,583 25,268,314


14

AmBond

NOTES TO THE FINANCIAL STATEMENTS


1. GENERAL INFORMATION

2. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

Standards effective during the financial year

Standards issued but not yet effective

Effective for

financial periods

beginning on or after

Revised Conceptual Framework for Financial Reporting 1 January 2020

Amendments to MFRS 3 - Definition of a Business 1 January 2020

Amendments to MFRS 101 and MFRS 108 - Definition of Material 1 January 2020

Amendments to MFRS 7, MFRS 9 and MFRS 139 - 1 January 2020

Interest Rate Benchmark Reform

MFRS 17 Insurance Contracts 1 January 2021

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

of Assets between an Investor and its Associate or Joint Venture

AmBond (“the Fund”) was established pursuant to a Deed dated 17 January 2000 as amended

by Deeds Supplemental thereto (“the Deed”), between AmFunds Management Berhad as the

Manager, HSBC (Malaysia) Trustee Berhad as the Trustee and all unitholders.

The Fund was set up with the objective of providing investors with a consistent stream of income

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

the units in the Fund were first offered for sale on 20 January 2000.

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

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

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

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

Guidelines on Unit Trust Funds in Malaysia.

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

material financial impact to the financial statements.

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

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

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

application.

The financial statements were authorised for issue by the Chief Executive Officer of the

Manager on 12 June 2020.

15

AmBond



3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3.1 Income recognition

(i) Interest income

(ii) Gain or loss on disposal of investments

3.2 Income tax

3.3 Functional and presentation currency

For all interest-bearing financial assets, interest income is calculated using the

effective interest method. Effective interest rate is the rate that exactly discounts

estimated future cash payments or receipts through the expected life of the financial

instrument or a shorter period, where appropriate, to the net carrying amount of the

financial asset. The calculation takes into account all contractual terms of the financial

instrument and includes any fees or incremental costs that are directly attributable to

the instrument and are an integral part of the effective interest rate, but not future

credit losses.

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.

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

Fund operates that most faithfully represents the economic effects of the underlying

transactions. The functional currency of the Fund is Ringgit Malaysia (“RM”) which reflects

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

has also adopted RM as its presentation currency.

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

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

equity.

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

from or paid to the tax authorities. The tax rates and tax laws used to compute the amount

are those that are enacted or substantively enacted at the reporting date.

On disposal of investments, the net realised gain or loss on disposal is measured as

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

investments. The net realised gain or loss is recognised in profit or loss.

Once the recorded value of a financial asset or a group of similar financial assets has

been reduced due to an impairment loss, interest income continues to be recognised

using the rate of interest used to discount the future cash flows for the purpose of

measuring the impairment loss.

16

AmBond



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

3.4 Statement of cash flows

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

3.5 Distribution

3.6 Unitholders’ capital

3.7 Financial assets – initial recognition and measurement

(i) Initial recognition

(ii) Initial measurement

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

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

financial asset. All financial liabilities are recognised initially at fair value and, in the

case of financial liabilities not recorded at FVTPL, net of directly attributable

transaction costs.

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

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

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

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

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

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

classified as equity instruments under MFRS 132 Financial Instruments: Presentation

(“MFRS 132”).

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

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

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

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

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

Cash equivalents are short-term, highly liquid investments that are readily convertible to

cash with insignificant risk of changes in value.

17

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3.7 Financial assets – initial recognition and measurement (cont'd.)

(iii) “Day 1” profit or loss

3.8 Financial assets – classification and subsequent measurement

Business model

Cash flow characteristics

Where the business model is to hold the financial assets to collect contractual cash flows,

or to collect contractual cash flows and sell, the Fund assesses whether the financial

assets contractual cash flows represent solely payment of principal and interest (“SPPI”).

In making this assessment, the Fund considers whether the contractual cash flows are

consistent with a basic lending arrangement, i.e. interest includes only consideration for

time value of money, credit risk, other basic lending risks and a profit margin that is

consistent with a basic lending arrangement. Financial assets with embedded derivatives

are considered in their entirety when determining whether their cash flows are SPPI.

The business model reflects how the Fund manages the financial assets in order to

generate cash flows. That is, whether the Fund’s objective is solely to collect the

contractual cash flows from the assets, or is to collect both the contractual cash flows and

cash flows arising from the sale of assets. If neither of these is applicable (e.g. the

financial assets are held for trading purposes), then the financial assets are classified as

part of “other” business model. Factors considered by the Fund in determining the

business model for a portfolio of assets include past experience on how the cash flows for

these assets were collected, how the asset’s performance is evaluated and reported to key

management personnel, and how risks are assessed and managed.

The classification and subsequent measurement of debt instruments held by the Fund are

determined based on their business model and cash flow characteristics.

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

immediately recognises the difference between the transaction price and fair value (a

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

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

on a valuation technique that uses only data from observable markets. In all other

cases, the difference between the transaction price and model value is recognised in

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

instrument over its tenure.

18

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3.9 Financial assets under MFRS 9

(i) Classification and measurement

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

Financial assets at amortised cost

Financial assets at FVOCI

Financial assets at FVTPL

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

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

and the contractual cash flow characteristics of the financial instruments (“SPPI test”).

The business model test determines whether cash flows will result from collecting

contractual cash flows, selling the financial assets, or both and the assessment is

performed on a portfolio basis. The SPPI test determines whether the contractual cash

flows are solely for payments of principal and interest and the assessment is

performed on a financial instrument basis.

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

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

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

“Net gain or loss on financial assets at FVTPL”. Interest earned elements of such

instrument is recorded separately in “Interest income”.

These investments are initially recorded at fair value and transaction costs are

expensed in the profit or loss. Subsequent to initial recognition, these investments are

remeasured at fair value. All fair value adjustments are initially recognised through

OCI. Debt instruments at FVOCI are subject to impairment assessment.

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

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

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

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

and interest on the outstanding principal.

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

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

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

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

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

due from financial institutions, amount due from the Manager and other receivables.

19

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3.9 Financial assets under MFRS 9 (cont'd.)

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

Financial assets at FVTPL (cont'd.)

3.10 Financial liabilities – classification and subsequent measurement

3.11 Derecognition of financial instruments

(i) Derecognition of financial asset

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

-

(ii) Derecognition of financial liability

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

- the Fund has transferred substantially all the risks and rewards of the asset, or

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

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

inconsistency. Equity instruments are normally measured at FVTPL, nevertheless, the

Fund is allowed to irrevocably designate equity instruments that are not held for

trading as FVOCI, with no subsequent reclassification of gains or losses to profit or

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

cancelled or expired. Gains and losses are recognised in profit or loss when the

liabilities are recognised, and through the amortisation process.

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

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

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

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

similar financial assets) is derecognised when:

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

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

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

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

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

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

- the Fund has neither transferred nor retained substantially all the risks and

20

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

-

-

-

3.13 Determination of fair value

3.14 Classification of realised and unrealised gains and losses

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

loss.

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

calculated using the weighted average method. They represent the difference between an

instrument’s initial carrying amount and disposal amount.

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

of possible outcomes;

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

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

date. The measurement of ECL reflects:

For investments in fixed income securities, nominal value is the face value of the securities

and fair value is determined based on the indicative prices from Bond Pricing Agency

Malaysia Sdn Bhd plus accrued interest, which includes the accretion of discount and

amortisation of premium. Adjusted cost of investments relates to the purchased cost plus

accrued interest, adjusted for amortisation of premium and accretion of discount, if any,

calculated over the period from the date of acquisition to the date of maturity of the

respective securities as approved by the Manager and the Trustee. The difference

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

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

distributable in nature.

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

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

The Fund may also write-off financial assets that are still subject to enforcement activity

when there is no reasonable expectation of full recovery. If a write-off is later recovered,

the recovery is credited to profit or loss.

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

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

economic conditions.

the time value of money; and

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

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

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

period.

21

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3.15 Significant accounting estimates and judgments

4. INVESTMENTS

2020 2019

RM RM

Financial assets at FVTPL

At nominal value:

Corporate bonds 536,600,000 137,500,000

Malaysian Government bonds - 46,000,000

Quasi-Government bonds 20,000,000 -

556,600,000 183,500,000

At fair value:

Corporate bonds 560,864,369 142,684,406

Malaysian Government bonds - 48,833,688

Quasi-Government bonds 21,147,044 -

582,011,413 191,518,094

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

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

estimation uncertainty at the reporting date, that have a significant risk of causing a

material adjustment to the carrying amounts of assets and liabilities within the next

The Fund classifies its investments as financial assets at FVTPL as the Fund may sell its

investments in short-term for profit-taking or to meet unitholders’ cancellation of units.

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

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

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

date. However, uncertainty about these assumptions and estimates could result in

outcomes that could require a material adjustment to the carrying amount of the asset or

liability in the future.

22

AmBond



4. INVESTMENTS (CONT’D.)

Details of investments are as follows:

Fair

value as a

Maturity Credit Nominal Fair Adjusted percentage

date Issuer rating value value cost of NAV

RM RM RM %

2020

Corporate bonds

15.04.2020 DRB-Hicom

Berhad A 7,200,000 7,459,315 7,449,325 1.15

12.05.2021 Jimah

Energy

Ventures

Sdn Bhd AA 500,000 551,740 550,446 0.08

21.05.2024 RHB Islamic

Bank

Berhad AA 5,000,000 5,126,215 5,078,115 0.79

14.06.2024 Hong Leong

Financial

Group

Berhad AA 20,000,000 20,367,110 20,252,110 3.13

28.06.2024 CIMB Group

Holdings

Berhad A 10,000,000 10,319,640 10,124,340 1.59

08.07.2024 CIMB Thai

Bank Public

Company

Limited AA 5,000,000 5,006,403 5,047,754 0.77

11.10.2024 Edra Solar

Sdn Bhd AA 100,000 102,209 102,014 0.02

03.02.2025 Hong Leong

Assurance

Berhad AA 10,000,000 9,980,578 10,061,178 1.53

27.02.2025 TG Excellence

Berhad AA 20,000,000 19,838,589 20,288,730 3.05

15.08.2025 Sabah

Development

Bank

Berhad AA 40,000,000 41,106,997 40,312,136 6.32

23

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Fair

value as a



RM RM RM %

2020 (cont'd.)

Corporate bonds (cont'd.)

24.03.2026 Sime Darby

Plantation

Sdn Bhd AA 10,000,000 10,866,784 10,710,555 1.67

02.10.2026 UMW

Holdings

Berhad AA 5,000,000 5,469,862 5,154,910 0.84

30.10.2026 Southern

Power

Generation

Sdn Bhd AA 5,000,000 5,341,116 5,338,978 0.82

21.12.2026 MBSB Bank

Berhad A 79,000,000 80,965,130 80,171,393 12.45

19.03.2027 IJM Land

Berhad A 5,000,000 5,121,104 5,010,204 0.79

11.08.2027 Bakun Hydro

Power

Generation

Sdn Bhd AAA 5,000,000 5,238,266 5,151,044 0.81

09.12.2027 First Abu

Dhabi Bank

P.J.S.C. AA 14,800,000 15,709,245 15,214,293 2.41

20.04.2028 UMW

Holdings

Berhad A 48,000,000 54,272,522 54,656,547 8.34

05.07.2028 Edra Energy

Sdn Bhd AA 5,000,000 5,616,835 5,258,682 0.86


Power

Generation

Sdn Bhd AAA 5,000,000 5,276,133 5,087,249 0.81

20.09.2029 Digi

Telecommunications

Sdn Bhd AAA 25,000,000 24,115,589 25,016,378 3.71

24

AmBond




Fair

value as a



RM RM RM %

2020 (cont'd.)


27.09.2029 Kuala Lumpur

Kepong

Berhad AA 5,000,000 4,884,969 5,002,568 0.75


Berhad A 35,000,000 33,969,586 35,619,390 5.22


Sdn Bhd AA 5,000,000 5,700,395 5,339,174 0.88

11.01.2030 Projek

Lebuhraya

Usahasama

Berhad AAA 10,000,000 10,874,219 10,665,048 1.67

08.05.2030 Putrajaya

Bina Sdn

Bhd AAA 5,000,000 5,142,425 5,083,425 0.79

30.04.2031 Southern

Power

Generation

Sdn Bhd AA 5,000,000 5,475,284 5,575,052 0.84

08.05.2031 Putrajaya

Bina Sdn

Bhd AAA 5,000,000 5,143,468 5,084,418 0.79

31.10.2031 Southern

Power

Generation

Sdn Bhd AA 5,000,000 5,498,573 5,483,668 0.85

25.11.2031 Manjung

Island

Energy

Berhad AAA 5,000,000 5,472,918 5,629,821 0.84


Sdn Bhd AA 5,000,000 5,840,437 5,247,305 0.90

25

AmBond




Fair

value as a



RM RM RM %

2020 (cont'd.)


29.08.2033 Tenaga

Nasional

Berhad AAA 10,000,000 10,638,316 10,426,733 1.64


Sdn Bhd AA 5,000,000 5,886,379 5,724,371 0.90

14.02.2034 Danum

Capital

Berhad AAA 15,000,000 15,831,245 15,090,395 2.43

23.06.2034 YTL

Corporation

Berhad AA 40,000,000 40,660,986 40,798,449 6.25


Sdn Bhd AA 5,000,000 5,904,851 5,750,154 0.91

27.09.2034 Kuala

Lumpur

Kepong

Berhad AA 15,000,000 14,368,216 15,176,002 2.21


Sdn Bhd AA 5,000,000 5,925,522 5,775,960 0.91

17.08.2035 Sarawak

Energy

Berhad AAA 5,000,000 5,566,751 5,443,336 0.86


Sdn Bhd AA 5,000,000 5,988,736 5,332,659 0.92

11.11.2036 YTL

Corporation

Berhad AA 10,000,000 10,733,656 10,279,932 1.65


Sdn Bhd AA 2,000,000 2,401,643 2,124,444 0.37

03.08.2037 Tenaga

Nasional

Berhad AAA 10,000,000 11,104,412 11,415,350 1.70

Total corporate bonds 536,600,000 560,864,369 558,104,035 86.22

26

AmBond




Fair

value as a



RM RM RM %

2020 (cont'd.)

Quasi-Government bond

10.03.2034 Prasarana

Malaysia

Berhad NR 20,000,000 21,147,044 20,049,644 3.25

Total Quasi-Government

bond 20,000,000 21,147,044 20,049,644 3.25

Total financial assets at FVTPL 582,011,413 578,153,679 89.47

Excess of fair value over adjusted cost 3,857,734

2019

Corporate bonds

31.03.2020 KT Kira

Sertifikalari

Varlik

Kiralama

A.S. A 13,000,000 13,046,396 13,013,730 5.84


Berhad A 7,200,000 7,469,493 7,446,586 3.34

12.05.2021 Jimah

Energy

Ventures

Sdn Bhd AA 500,000 571,258 577,982 0.26


Berhad A 3,000,000 3,010,290 3,010,902 1.35

02.10.2026 UMW

Holdings

Berhad AA 5,000,000 5,357,567 5,156,085 2.40

19.03.2027 IJM Land

Berhad A 5,000,000 5,054,584 5,008,634 2.26

27

AmBond




Fair

value as a



RM RM RM %

2019 (cont'd.)


09.12.2027 First Abu

Dhabi Bank

P.J.S.C. AA 14,800,000 15,384,971 15,229,698 6.88

20.04.2028 UMW

Holdings

Berhad A 5,000,000 5,439,458 5,427,290 2.43


Power

Generation

Sdn Bhd AAA 5,000,000 5,109,259 5,090,181 2.29

15.03.2030 Tanjung Bin

Energy

Issuer

Berhad AA 1,000,000 1,124,473 1,108,839 0.50

16.03.2032 Tanjung Bin

Energy

Issuer

Berhad AA 1,000,000 1,151,698 1,050,357 0.52


Sdn Bhd AA 5,000,000 5,252,629 5,252,822 2.35

25.11.2033 Sarawak

Energy

Berhad AA 5,000,000 5,273,182 5,084,082 2.36

14.02.2034 Danum

Capital

Berhad AAA 25,000,000 25,763,291 25,141,041 11.52

10.03.2034 Prasarana

Malaysia

Berhad NR 20,000,000 20,436,679 20,044,679 9.14


Sdn Bhd AA 5,000,000 5,317,375 5,338,138 2.38

28

AmBond




Fair

value as a



RM RM RM %

2019 (cont'd.)


22.08.2036 Lebuhraya

DUKE

Fasa 3

Sdn Bhd AA 5,000,000 5,571,961 5,178,533 2.49

11.11.2036 YTL

Corporation

Berhad AA 10,000,000 10,219,412 10,277,309 4.57


Sdn Bhd AA 2,000,000 2,130,430 2,126,131 0.95

137,500,000 142,684,406 140,563,019 63.83

Malaysian Government bonds

31.10.2028 Government

of

Malaysia NR 10,000,000 10,556,036 10,327,605 4.72


of

Malaysia NR 15,000,000 16,395,831 15,846,616 7.33


of

Malaysia NR 10,000,000 10,158,208 10,012,262 4.54


of

Malaysia NR 11,000,000 11,723,613 11,276,898 5.24

46,000,000 48,833,688 47,463,381 21.83

Total financial assets at FVTPL 191,518,094 188,026,400 85.66

Excess of fair value over adjusted cost 3,491,694

29

AmBond




2020 2019

% %

Corporate bonds 4.53 5.01

Malaysian Government bonds - 4.29Quasi-Government bonds 4.01 -

Less than 1 year to More than

1 year 5 years 5 years

RM RM RM

At nominal value:

Corporate bonds 7,200,000 70,600,000 458,800,000 Quasi-Government bonds - - 20,000,000

At nominal value:

Corporate bonds - 23,700,000 113,800,000

Malaysian Government bonds - - 46,000,000

5. AMOUNT DUE FROM/TO MANAGER

2020 2019

Note RM RM

(a) Due from ManagerCreation of units (i) 1,712,026 7,193,985

(b) Due to Manager

Redemption of units (ii) 253,638 -Manager’s fee payable (iii) 703,494 167,181

957,132 167,181

(i)

(ii)

2020

Analyses of the remaining maturity of investments as at 31 March 2020 and 31 March 2019 are

as follows:

Effective yield

The amount represents amount receivable from the Manager for units created.

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

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

redemption of units is three business days.

2019

The weighted average effective yield on investments are as follows:

30

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5. AMOUNT DUE FROM/TO MANAGER (CONT’D.)

(iii)

6. DEPOSITS WITH FINANCIAL INSTITUTIONS

2020 2019

RM RM

At nominal value:Short-term deposits with licensed banks 67,979,000 25,264,000

At carrying value:Short-term deposits with licensed banks 67,983,749 25,266,353

Details of deposit with financial institution are as follows:

Carrying

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

RM RM RM %

Short-term deposit with a licensed bank

01.04.2020 AmBank (M)Berhad* 67,979,000 67,983,749 67,979,000 10.45

Short-term deposit with a licensed bank

01.04.2019 Public Bank Berhad 25,264,000 25,266,353 25,264,000 11.30

* A licensed bank related to the Manager.

2020 2019 2020 2019

% % Day Day Short-term deposit with

licensed banks 2.55 3.40 1 1

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

payable is one month.

Manager’s fee is at a rate of 1.00% (2019: 1.00%) per annum on the NAV of the Fund,

calculated on a daily basis.

2019

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

deposits are as follows:

Weighted average effective

interest rate Remaining maturity

2020

31

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7. AMOUNT DUE TO TRUSTEE

8. NET GAIN FROM INVESTMENTS

2020 2019

RM RM

Net gain on financial assets at FVTPL comprised:

− Net realised gain on sale of investments 3,256,152 155,280 − Net unrealised gain on changes in fair values of

investments 366,040 4,189,646

3,622,192 4,344,926

9. TOTAL EQUITY

Total equity is represented by:

2020 2019Note RM RM

Unitholders’ capital (a) 646,663,403 222,984,715 Retained earnings

− Realised losses (b) (32,035) (2,889,610)− Unrealised gain (c) 3,857,734 3,491,694

650,489,102 223,586,799

Effective from 1 September 2019, the Trustee’s fee is at a rate of 0.04% per annum on the NAV

of the Fund, calculated on a daily basis.

Up until 31 August 2019, Trustee’s fee is at a rate of 0.05% (2019: 0.05%) per annum on the

NAV of the Fund, calculated on a daily basis.

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

one month.

32

AmBond



9. TOTAL EQUITY (CONT’D.)

(a) Unitholders’ capital/units in circulation

Number of Number of

units RM units RM

At beginning of the

financial year 180,337,785 222,984,715 124,916,279 153,869,871 Creation during the

financial year 782,653,440 1,013,219,149 105,492,031 129,549,733 Distributions reinvested 15,341,867 19,675,579 3,811,060 4,675,496 Cancellation during the

financial year (466,788,169) (609,216,040) (53,881,585) (65,110,385)At end of the

financial year 511,544,923 646,663,403 180,337,785 222,984,715

(b) Realised – distributable

2020 2019

RM RM

At beginning of the financial year (2,889,610) (3,827,218)Net realised income for the financial year 22,905,737 5,959,874 Distributions out of realised income (Note 12) (20,048,162) (5,022,266)At end of the financial year (32,035) (2,889,610)

(c) Unrealised – non-distributable

2020 2019

RM RM

At beginning of the financial year 3,491,694 (697,952)Net unrealised gain for the financial year 366,040 4,189,646 At end of the financial year 3,857,734 3,491,694

20192020

33

AmBond



10. UNITS HELD BY RELATED PARTIES

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

Related parties Relationship

AmFunds Management Berhad The Manager

AmInvestment Bank Berhad Holdings company of the Manager

AMMB Holdings Berhad Ultimate holding company of the Manager

Subsidiaries and associate companies of the

ultimate holding company of the Manager

11. INCOME TAX

2020 2019

RM RM

Net income before tax 23,271,777 10,149,520

Taxation at Malaysian statutory rate of 24% (2019: 24%) 5,585,226 2,435,885 Tax effects of:

Income not subject to tax (7,132,485) (2,824,419)Restriction on tax deductible expenses for unit trust fund 1,334,083 328,124 Non-permitted expenses for tax purposes 64,944 23,952 Permitted expenses not used and not available for

future financial years 148,232 36,458 Tax expense for the financial year - -

There were no units held by the Manager or any related party as at 31 March 2020 and 31

March 2019.

Subsidiaries and associates of

AMMB as disclosed in its

financial statements

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

to the interest paid or credited to a unit trust that is a wholesale fund which is a money market

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

from tax.

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

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

Income tax payable is calculated on investment income less deduction for permitted expenses

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

34

AmBond



12. DISTRIBUTION

2020 2019

RM RM

Interest income 23,546,737 6,504,047 Net realised gain on sale of investments 2,948,337 137,112

26,495,074 6,641,159 Less: Expenses (6,446,912) (1,618,893)

Total amount of distributions 20,048,162 5,022,266

Gross/net distributions per unit (sen) 3.91 3.30

Distributions made out of:

− Realised income [Note 9(b)] 20,048,162 5,022,266

Comprising :

Distributions reinvested 19,675,579 4,675,496

Distributions payable 211,091 188,287

Cash distributions 161,492 158,483

20,048,162 5,022,266

13. MANAGEMENT EXPENSE RATIO (“MER”)

The Fund’s MER is as follows:

2020 2019

% p.a. % p.a.

Manager’s fee 1.00 1.00 Trustee’s fee 0.04 0.05 Fund’s other expenses -* 0.02

Total MER 1.04 1.07

* represents less than 0.01%

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

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

Distributions to unitholders declared on 25 September 2019 and 23 March 2020 (declared on 27

September 2018 and 27 March 2019 for the previous financial year) are from the following

sources:

35

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14. PORTFOLIO TURNOVER RATIO (“PTR”)

15. SEGMENTAL REPORTING

16. TRANSACTIONS WITH FINANCIAL INSTITUTIONS

Transaction value

Financial institutions RM %

AmBank (M) Berhad * 485,013,575 28.41 Standard Chartered Bank Malaysia Berhad 444,934,938 26.06 Bank Islam Malaysia Berhad 279,586,704 16.38 CIMB Bank Berhad 156,083,849 9.14 RHB Investment Bank Berhad 119,085,151 6.98 Malayan Banking Berhad 84,766,208 4.97 Citibank (M) Bhd 81,672,890 4.78 Hong Leong Investment Bank Berhad 30,000,000 1.76 Hong Leong Bank Berhad 23,982,271 1.40

Other financial institutions 2,043,849 0.12

Total 1,707,169,435 100.00

*

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

investments to the average NAV of the Fund calculated on a daily basis, is 1.41 times (2019:

1.24 times).

In accordance with the objective of the Fund, substantially all of the Fund’s investments are

made in the form of fixed income securities and money market instruments in Malaysia. The

Manager is of the opinion that the risk and rewards from these investments are not individually

or segmentally distinct and hence the Fund does not have a separately identifiable business or

geographical segments.

Details of transactions with financial institutions for the financial year ended 31 March 2020

are as follows:

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

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

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

independent third parties.

The above transactions were in respect of fixed income instruments. Transactions in these

investments do not involve any commission or brokerage.

36

AmBond



17. FINANCIAL INSTRUMENTS

(a) Classification of financial instruments

Financial Financial

Financial assets at liabilities at

assets at amortised amortised

FVTPL cost cost Total

RM RM RM RM

2020

Assets

Investments 582,011,413 - - 582,011,413

Amount due from

Manager - 1,712,026 - 1,712,026

Deposits with financial

institutions - 67,983,749 - 67,983,749

Cash at banks - 1,834 - 1,834 Total financial assets 582,011,413 69,697,609 - 651,709,022

Liabilities

Amount due to

Manager - - 957,132 957,132

Amount due to

Trustee - - 26,404 26,404

Distribution

payable - - 211,091 211,091

Sundry payables and

accrued expenses - - 25,293 25,293

Total financial liabilities - - 1,219,920 1,219,920

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

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

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

the Fund in the statement of financial position by the class of financial instrument to

which they are assigned, and therefore by the measurement basis.

37

AmBond



17. FINANCIAL INSTRUMENTS (CONT’D.)

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

Financial Financial

Financial assets at liabilities at

assets at amortised amortised

FVTPL cost cost Total

RM RM RM RM

2019

Assets

Investments 191,518,094 - - 191,518,094

Amount due from

Manager - 7,193,985 - 7,193,985

Deposits with financial

institutions - 25,266,353 - 25,266,353

Cash at banks - 1,961 - 1,961

Total financial assets 191,518,094 32,462,299 - 223,980,393

Liabilities

Amount due

to Manager - - 167,181 167,181

Amount due to

Trustee - - 7,292 7,292

Distribution

payable - - 188,287 188,287

Sundry payables and

accrued expenses - - 30,834 30,834

Total financial liabilities - - 393,594 393,594

2020 2019

RM RM

Net gain from financial assets at FVTPL 3,622,192 4,344,926

Income, of which derived from:

- Interest income from financial assets at FVTPL 24,591,746 6,904,702

- Interest income from financial assets atamortised cost 1,504,751 518,785

Income, expense, gains and

losses

38

AmBond



17. FINANCIAL INSTRUMENTS (CONT’D.)

(b) Financial instruments that are carried at fair value

Level 1:

Level 2:

Level 3:

Level 1 Level 2 Level 3 Total

RM RM RM RM

2020

Financial assets at FVTPL - 582,011,413 - 582,011,413

2019

Financial assets at FVTPL - 191,518,094 - 191,518,094

(c)

• Amount due from/to Manager

• Deposits with financial institutions

• Cash at banks

• Amount due to Trustee

• Distributions payable

• Sundry payables and accrued expenses

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

fair value that are not based on observable market data.

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

the level of the fair value hierarchy:

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

amounts are reasonable approximation of fair value

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

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

period to maturity or short credit period:

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

carrying amounts are not reasonable approximation of their respective fair values.

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

recorded fair values are observable; either directly or indirectly; or

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

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

financial instruments by valuation technique:

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

39

AmBond



18. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

(a) Market risk

(i) Interest rate risk

Percentage shift in yield

curve by: 2020 2019

RM RM

+100 bps (39,520,472) (16,412,472)

-100 bps 43,053,131 18,893,596

(b) Credit risk

Fund’s NAV, or

theoretical value

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

loss to the Fund by failing to discharge an obligation. The Fund can invest up to 100% of

the NAV in fixed income instruments. As such the Fund would be exposed to the risk of

bond issuers and financial institutions defaulting on its repayment obligations which in

turn would affect the NAV of the Fund.

Sensitivity of the

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

single issuer risk, regulatory risk, management risk and non-compliance risk.

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

said risks, careful selection of investments coupled with stringent compliance to investments

restrictions as stipulated by the Capital Market and Services Act 2007, Securities

Commission’s Guidelines on Unit Trust Funds and the Deed as the backbone of risk

management of the Fund.

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

changes in market risk factors such as equity prices, interest rates (yield curve), foreign

exchange rates and commodity prices.

Interest rate risk will affect the value of the Fund’s investments, given the interest

rate movements, which are influenced by regional and local economic

developments as well as political developments.

Domestic interest rates on deposits and placements with licensed financial

institutions are determined based on prevailing market rates.

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

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

+100bps and -100bps respectively:

40

AmBond



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

(b) Credit risk (cont'd.)

(i) Credit quality of financial assets

As a % of

debt As a % of Credit rating RM securities NAV

2020

AAA 104,403,742 17.94 16.05

AA 264,353,330 45.42 40.63

A 192,107,297 33.01 29.54

Non-rated 21,147,044 3.63 3.25

582,011,413 100.00 89.47

2019

AAA 30,872,550 16.12 13.81

AA 57,354,956 29.95 25.66

A 34,020,221 17.76 15.22

Non-rated 69,270,367 36.17 30.97

191,518,094 100.00 85.66

As a % As a % of Credit rating RM of deposits NAV

P1/MARC-1 67,983,749 100.00 10.45

P1/MARC-1 25,266,353 100.00 11.30

(ii) Credit risk concentration

For deposits with financial institutions, the Fund only makes placements with

financial institutions with sound rating. The following table presents the Fund’s

portfolio of deposits by rating category as at 31 March 2020 and 31 March 2019:

2020

2019

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

credit risk.

Concentration of risk is monitored and managed based on sectorial distribution. The

table below analyses the Fund’s portfolio of debt securities by sectorial distribution

as at 31 March 2020 and 31 March 2019:

The following table analyses the Fund’s portfolio of debt securities by rating

category as at 31 March 2020 and 31 March 2019:

41

AmBond




(b) Credit risk (cont'd.)

(ii) Credit risk concentration (cont'd.)

As a % of debt As a % of Sector RM securities NAV

2020

Diversified holdings 173,518,276 29.81 26.67

Financial services 188,581,318 32.40 28.99

Industrial products 19,838,589 3.41 3.05

Infrastructures and utilities 138,520,324 23.80 21.30

Plantation and agriculture 30,119,969 5.18 4.63

Property and real estate 10,285,893 1.77 1.58

Transportation 21,147,044 3.63 3.25

582,011,413 100.00 89.47

2019

Diversified holdings 75,360,491 39.35 33.71

Financial services 15,384,971 8.03 6.88

Infrastructures and utilities 31,502,265 16.45 14.10

Transportation 20,436,679 10.67 9.14

Public finance 48,833,688 25.50 21.83

191,518,094 100.00 85.66

There is no geographical risk as the Fund invests only in investments in Malaysia.

(c) Liquidity risk

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

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

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

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

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

meet anticipated payments and cancellations of units by unitholders. Liquid assets

comprise of deposits with licensed financial institutions and other instruments, which are

capable of being converted into cash within 5 to 7 days. The Fund’s policy is to always

maintain a prudent level of liquid assets so as to reduce liquidity risk.

42

AmBond




(c)

The following table presents the undiscounted contractual cash flows from different asset and liability classes in the Fund:

0 – 1 1 – 2 2 – 3 3 – 4 4 – 5 More than

year years years years years 5 years

RM RM RM RM RM RM

2020

Financial assets

Investments 34,804,934 27,717,517 27,205,349 27,219,475 86,491,925 638,018,572

Deposit with financial institution 67,983,749 - - - - -

Cash at banks 1,834 - - - - -

Other assets 1,712,026 - - - - - Total assets 104,502,543 27,717,517 27,205,349 27,219,475 86,491,925 638,018,572

Financial liabilities

Other liabilities 1,219,920 - - - - -

2019

Financial assets

Investments 22,536,539 15,720,681 8,717,680 8,192,160 11,190,034 243,266,444

Deposit with financial institutions 25,271,060 - - - - -

Cash at banks 1,961 - - - - -

Other assets 7,193,985 - - - - - Total assets 55,003,545 15,720,681 8,717,680 8,192,160 11,190,034 243,266,444

Financial liabilities

Other liabilities 393,594 - - - - -

Liquidity risk (cont'd.)

Contractual cash flows (undiscounted)

43

AmBond




(d) Single issuer risk

(e) Regulatory risk

(f) Management risk

(g) Non-compliance risk

19. CAPITAL MANAGEMENT

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

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

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

ratings.

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

policies, the Deed of the Fund, securities law or guidelines issued by the regulators. Non-

compliance risk may adversely affect the investments of the Fund when the Fund is

forced to rectify the non-compliance.

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

may affect the NAV of the Fund.

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

31 March 2020 and 31 March 2019.

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.

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

and the NAV of the Fund.

44

AmBond

STATEMENT BY THE MANAGER

For and on behalf of the Manager

GOH WEE PENG

Chief Executive Officer

Kuala Lumpur, Malaysia

12 June 2020

AmFunds Management Berhad

I, Goh Wee Peng, for and on behalf of the Manager, AmFunds Management Berhad, for

AmBond (the “Fund”) do hereby state that in the opinion of the Manager, the accompanying

statement of financial position, statement of comprehensive income, statement of changes in

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

Malaysian Financial Reporting Standards and International Financial Reporting Standards so as

to give a true and fair view of the financial position of the Fund as at 31 March 2020 and the

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

then ended.

45

TRUSTEE’S REPORT

TO THE UNITHOLDERS OF

AMBOND

(a)

(b)

(c)

During this financial year, a total distribution of 3.91 sen per unit (net) has been distributed to the

unitholders of the Fund. We are of the view that the distributions are not inconsistent with the

objectives of the Fund.

We have acted as Trustee of AmBond (“the Fund”) for the financial year ended 31 March 2020.

To the best of our knowledge, AmFunds Management Berhad (“the Management Company”),

has operated and managed the Fund in accordance with the following:-

limitations imposed on the investment powers of the Management Company and the

Trustee under the Deeds, the Securities Commission’s Guidelines on Unit Trust Funds, the

Capital Markets and Services Act 2007 and other applicable laws;

valuation/pricing is carried out in accordance with the Deeds and any regulatory

requirements; and

creation and cancellation of units are carried out in accordance with the Deeds and any

regulatory requirements.

For HSBC (Malaysia) Trustee Berhad

Tan Bee Nie

Manager, Investment Compliance Monitoring

Kuala Lumpur

12 June 2020

46

47

DIRECTORY

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

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

For enquiries about this or any of the other Funds offered by AmFunds Management Berhad Please call 2032 2888 between 8.45 a.m. to 5.45 p.m. (Monday to Thursday),

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

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

AmFunds Management Berhad 198601005272 (154432-A)

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