APEX dynamic fund (ADF)For Financial Year Ended 31 December 2019 (Audited)
Apex Dynamic Fund
3. MANAGER’S REPORT ..................................................................................................................................... 4
4. TRUSTEE’S REPORT ........................................................................................................................................ 9
5. INDEPENDENT AUDITORS’ REPORT ............................................................................................................. 10
6. STATEMENT BY MANAGER .......................................................................................................................... 13
6.1 STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME ........................................ 14
6.2 STATEMENT OF FINANCIAL POSITION ................................................................................................. 16
6.3 STATEMENT OF CHANGES IN NET ASSET VALUE ................................................................................. 17
6.4 STATEMENT OF CASH FLOWS .............................................................................................................. 18
6.5 NOTES TO THE FINANCIAL STATEMENTS ............................................................................................ 19
7. DIRECTORY ................................................................................................................................................... 49
Apex Dynamic Fund
TTYYPPEE OOFF FFUUNNDD Growth
OOBBJJEECCTTIIVVEE To seek capital appreciation by investing in equity and equity-related securities.
PPEERRFFOORRMMAANNCCEE
BBEENNCCHHMMAARRKK 70% of FBM KLCI 30% of Maybank Berhad 1-year fixed deposit rate
(Source : Bursa Malaysia and Maybank Berhad)
“The risk profile of the performance benchmark is not the same as the risk profile of the Fund.”
FFUUNNDD
DDIISSTTRRIIBBUUTTIIOONN
PPOOLLIICCYY
Distribution is at the discretion of the Manager. If income distributed, it will be automatically re-invested via issuance of additional Units in the Fund. Generally, in the absence of written instructions from the Unitholders, income for the Fund will be automatically reinvested into additional Units of the Fund at NAV per Unit on income payment date. Unitholders who wish to realise any income can do so by redeeming Units held in the Fund. For reinvestment into additional units, no sales charges will be imposed.
BBRREEAAKKDDOOWWNN OOFF
SSiizzee ooff UUnniitthhoollddiinngg
Total 249 100.00 19,002,191 100.00
UUNNIITTSS HHEELLDD BBYY
22.. FFUUNNDD PPEERRFFOORRMMAANNCCEE Summary of performance data is as follows:
3311..1122..22001199 3311..1122..22001188 3311..1122..22001177 RRMM RRMM RRMM
Portfolio Composition: - Equity securities 91.53 85.16 95.85 - Liquid assets and others 8.47 14.84 4.15
Net Assets Value (RM) 3,167,015 3,402,506 7,080,723 Number of Units in Circulation 19,002,191 22,409,605 33,915,707 Net Asset Value per Units (RM) 0.1667 0.1518 0.2088
Highest NAV Price for the period under review (RM) 0.1762 0.2177 0.2120 Lowest NAV Price for the period under review (RM) 0.1505 0.1513 0.1882
Total Return for the period under review (RM) - Capital growth 409,225 (1,168,101) 858,283 - Income distribution Nil 400,603 Nil
Gross Distribution Per Unit (RM) Nil 0.015 Nil
Net Distribution Per Unit (RM) Nil 0.014 Nil
Management Expenses Ratio (MER) (%) 1.91* 1.91 1.83 *there was no significant changes in the MER.
Portfolio Turnover Ratio (PTR) (times) 0.38* 0.47 0.63 *the PTR for the financial year was lower compared with previous financial year as there were lesser investment activities during the financial year under review.
Total Return Average Total Return ADF Index ADF Index 1 Year 9.82 -3.27 9.82 -3.27
3 Year -4.39 0.78 -1.46 0.26
5 Year -18.74 -1.99 -3.75 -0.40
Since Inception 18 May 2006 47.69 56.59 3.50 4.15
AAnnnnuuaall ttoottaall rreettuurrnn ffoorr eeaacchh ooff tthhee
llaasstt ffiivvee ffiinnaanncciiaall yyeeaarr eennddeedd
AADDFF
IInnddeexx 31.12.2019 9.82 -3.27 31.12.2018 -27.30 -3.11 31.12.2017 11.00 7.54 31.12.2016 -19.92 -1.10 31.12.2015 6.23 -1.67 Performance data independently verified by Novagni Analytics and Advisory Sdn Bhd (363145-W)
*Notes:
1. Total returns as at 31.12.2019. Total returns are calculated based in NAV per unit, adjusted for income
distribution, if any.
2. The basis of calculation for the average total return is by dividing the total return by the numbers of years.
PPaasstt ppeerrffoorrmmaannccee iiss nnoott nneecceessssaarriillyy iinnddiiccaattiivvee ooff ffuuttuurree ppeerrffoorrmmaannccee.. UUnniitt pprriicceess aanndd iinnvveessttmmeenntt
rreettuurrnnss mmaayy fflluuccttuuaattee..
Apex Dynamic Fund
33.. MMAANNAAGGEERR’’SS RREEPPOORRTT
FFUUNNDD’’SS OOBBJJEECCTTIIVVEE AACCHHIIEEVVEEMMEENNTTSS
The fund has not achieved its stated objective to seek capital appreciation by investing in equity and
equity related securities. For the period ended 31st December 2019, the Fund had achieved a total
return of 47.69% since its inception on 18th May 2006. The benchmark return was 56.59% for the
same period.
PPEERRFFOORRMMAANNCCEE AANNAALLYYSSIISS
For the one-year period ended 31st December 2019, the Fund achieved a positive return of 9.82%
against the benchmark return of -3.27%, resulting in the outperformance against the benchmark of
13.09%. The total NAV of the Fund decreased to RM 3,167,015 as at 31st December 2019 from RM
3,402,506 as at 31st December 2018. The decrease in NAV was mainly due to redemptions from unit
holders.
SSIINNCCEE 1188 MMAAYY 22000066 TTOO 3311 DDEECCEEMMBBEERR 22001199
AADDFF HHAASS UUNNDDEERRPPEERRFFOORRMMEEDD TTHHEE BBEENNCCHHMMAARRKK IINNDDEEXX BBYY 88..9900%%
Graph independently which verified by Novagni Analytics and Advisory Sdn Bhd (363145-W)
SSTTRRAATTEEGGIIEESS EEMMPPLLOOYYEEDD
The Fund had adopted the top-down and bottom up approach for its investment strategy. The
investment policy was to invest in mostly undervalued companies with good potential of growth.
Apex Dynamic Fund
5
The fund consists of only in shares or warrants that were listed on the Bursa Malaysia. In term of
market sector, the Fund had concentrated mainly in the areas of consumer products and services,
financial services and technology.
Investment strategy will remain centered on well-managed liquid stocks that exhibit good growth
prospects with strong earning visibility. Stocks with strong cash flows, decent yield and have
proactive capital management will also be considered.
AASSSSEETT AALLLLOOCCAATTIIOONN
QQUUOOTTEEDD SSEECCUURRIITTIIEESS 3311 DDEECC 22001199 3311 DDEECC 22001188
CCoonnssttrruuccttiioonn 3.6 2.5
CCoonnssuummeerr DDiissccrreettiioonn 5.7 10.1
IInndduussttrriiaallss 1.4 -
MMAARRKKEETT RREEVVIIEEWW
Malaysia underperformed the regional markets in 2019. The KLCI declined by 5.0% YoY in 2019
compared to the 15.4% YoY increase in MSCI Asia Pacific ex-Japan index (in USD terms) over the
same period.
2019 was another challenging year. It marked the 5th year of negative returns for the KLCI in the last
6 years. In our opinion, the underperformance of the KLCI was driven by the following factors.
1. Slowing GDP growth. Malaysia GDP in 2019 came in weaker at 4.3% YoY (vs 4.7% YoY in 2018).
4Q19 GDP disappointed at 3.6% YoY due to disruption in commodity related sectors. This was
the lowest quarterly growth since the global financial crisis in 2009. The central bank also warned
that the recent Coronavirus will have an impact on 1Q20 GDP. The weaker economic growth
outlook is likely to weigh down on corporate earnings.
2. Banks underperformed. In 2019, the financial sector did not fare well due to tepid loans growth
and margin pressure. Bank margins were affected by competition and the cut in the Overnight
Policy Rate (OPR) from 3.25% to 3.00% in May. This was the first OPR cut since 2016. The
financial sector was a drag on the index’s performance as it accounted for approximately 30% of
the KLCI’s market capitalisation and 50% of its earnings (source: Maybank & KAF Research).
3. Earnings drought. The trend of below expectations earnings continued in 2019. The market
started the year expecting market eps growth of 7-8%. However, the earnings growth for the
market in 2019 is likely to be in negative territory. The top performing sectors for the year were
energy, construction and technology while the worst performing sectors were healthcare,
property and financials.
4. Foreign outflows: In 2019, foreigners net sold RM11.1 billion worth of Malaysian equities. It was
a second consecutive year of outflow. In 2018, there was a net outflow of RM11.8 billion. On the
positive side, this indicated that the Malaysian market was under held by foreigners.
MMAARRKKEETT OOUUTTLLOOOOKK
External
The US and China reached a trade deal agreement in December 2019 which set the stage for a
temporary cease fire. As part of the agreement, China will halve tariffs on some USD75 billion worth
of US imports. This will take effect on 14th February 2020. Tariffs still remain on a further USD35
billion worth of US goods. Global markets were encouraged as it reaffirmed China’s commitment to
the trade deal and this lifted sentiment across markets.
The upward recovery in global Purchasing Managers’ Index (PMI) since 4Q2019 remains on track.
The J.P.Morgan Global All-Industry PMI registered an increase to 52.2 pts (+0.6 pt MoM) in the
month of January driven by both increases in manufacturing and services output. This would indicate
that when the fears of the Coronavirus subsides, global economic growth could pick up even further.
We observe that the global technology sector is experiencing a structural upcycle driven by the
adoption of 5G, ever more sophisticated mobile devices and the internet of things (IoT). US-based
Apex Dynamic Fund
Semiconductor Industry Association (SIA) is forecasting worldwide sales of semiconductors to
increase by 5.9% and 6.3% in 2020 and 2021, respectively. Malaysia will stand to benefit given its
exposure to the semiconductor space mainly through outsourced semiconductor assembly and
testing (OSAT) players, equipment makers, burn-in testers, Electronics Manufacturing Service (EMS),
hardware and software providers.
Domestic
We acknowledge that the pressure on Malaysia corporate earnings will continue in the 1H, at the
minimum. Banks, which is a big component of the KLCI’s earnings, are likely to experience lack-lustre
growth due to margin pressure and the weaker economy. The impact of the Coronavirus will depress
the growth rates of the economies in the region including Malaysia. Finally, the resolve by US-China
to iron out their remaining trade differences needs to be monitored.
Amidst the near-term headwinds, there are some positive drivers.
The government announced that it will introduce a stimulus package on 27th February 2020 to ease
the Coronavirus impact on the economy. In 2003, the government introduced a stimulus package of
RM8.1 billion to support the economy which was affected by the SARS pandemic.
The economy will also be supported by big ticket construction projects such as the recently revived
East Coast Rail Link, Bandar Malaysia, KL-SG High Speed Rail and the on-going Pan Borneo Highway
and MRT2 SBK Line. Inclusive of the above mentioned projects there is approximately RM146 billion
worth of infrastructure works to be awarded in 2020 onwards. This is supportive of the construction
and building materials sector.
In addition, Bank Negara Malaysia has room to cut interest rates again after lowering the Overnight
Policy Rate by 25 bps in January 2020. This will benefit sectors like automotive, property and REITS.
Our analysis indicates that local institutional funds are holding an ample level of cash. Also, the
Malaysian market remains under-held among foreign funds based on the net selling in the last two
years. A substantial amount of negative news have been priced into the market.
Finally, the recent Coronavirus outbreak may encourage a relocation of global supply chains to South
East Asia including Malaysia. Manufacturers are likely to accelerate their risk diversification from
China. Malaysia is an attractive investment destination due to its weak Ringgit. This trend will augur
well particularly for the local technology and manufacturing industries. In the first half of 2019, the
Malaysian Investment Development Authority reported that Malaysia has attracted a total of
RM49.5 billion in foreign direct investments (FDI), an increase of 97.2% YoY.
As at end-Jan 2020, the stockmarket is trading at CY2020/2021 PER of 15.2x/14.4x (source:
Bloomberg). This is reasonable vis-a-vis the market’s 12M forward mean PER of approximately 16.0x.
Notwithstanding the outlook of the broader economy, the Malaysia market has historically offered
good investment opportunities at the stock level. We therefore continue with our portfolio strategy
of bottom-up stock-picking. We favour technology, exporters, situational plays and companies with
earnings growth and/or those with dividend yield support.
Apex Dynamic Fund
The Manager will retain soft commissions received from stockbrokers, provided they are of
demonstrable benefit to the Unitholders. The soft commissions may take form of goods and services
such as data and quotation services, computer software and investment related publications which
are incidental to the management of the Fund. Rebates, if any, will be directed to the account of the
Fund.
During the period under review the Manager received data and quotation services and investment
related publications which are incidental to the Fund investment.
Apex Dynamic Fund
9
44.. TTRRUUSSTTEEEE’’SS RREEPPOORRTT TO THE UNITHOLDERS OF APEX DYNAMIC FUND
Trustee’s Report For Financial Year Ended 31 December 2019
We have acted as Trustee for APEX DYNAMIC FUND (“the Fund”) for the financial year ended 31 December 2019. To the best of our knowledge, APEX INVESTMENT SERVICES BERHAD (“the Manager”) has managed the Fund in the financial year under review in accordance with the following:
1. limitations imposed on the investment powers of the Manager under the deeds, securities laws
and Guidelines on Unit Trust Funds;
2. the valuation or pricing of the Fund is carried out in accordance with the deeds and relevant
regulatory requirement; and
3. the creation and cancellation of units of the Fund are carried out in accordance with the deeds
and relevant regulatory requirement.
BERNICE K M LAU Head, Operations Kuala Lumpur, Malaysia
20 February 2020
Apex Dynamic Fund
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS Opinion
We have audited the financial statements of Apex Dynamic Fund (“the Fund”), which comprise the statement of financial position as at 31 December 2019, and the statement of profit or loss and other comprehensive income, statement of changes in net asset value and statement of cash flows of the Fund for the financial year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 14 to 48.
In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Fund as at 31 December 2019 and of its financial performance, changes in net asset value and cash flows of the Fund for the financial year then ended in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards. Basis for Opinion We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence and Other Ethical Responsibilities We are independent of the Fund in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“By- Laws”) and the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code. Information Other than the Financial Statements and Auditors’ Report Thereon The Manager of the Fund is responsible for the other information. The other information comprises the information included in the annual report, but does not include the financial statements of the Fund and our auditors’ report thereon. Our opinion on the financial statements of the Fund does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements of the Fund, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Fund or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Apex Dynamic Fund
11
55.. IINNDDEEPPEENNDDEENNTT AAUUDDIITTOORRSS’’ RREEPPOORRTT TTOO TTHHEE UUNNIITTHHOOLLDDEERRSS OOFF AAPPEEXX DDYYNNAAMMIICC FFUUNNDD ((CCOONNTT’’DD)) Responsibilities of the Manager and Trustee for the Financial Statements 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 of the Fund is also responsible for such internal control as the Manager determines is necessary to enable the preparation of financial statements 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 intend to liquidate the Fund or to cease operations, or have no realistic alternative but to do so. The Trustee is responsible for overseeing the Fund’s financial reporting process. The Trustee is also 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. Auditors’ Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements of the Fund as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:-
Identify and assess the risks of material misstatement of the financial statements of the Fund, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Manager.
Apex Dynamic Fund
55.. IINNDDEEPPEENNDDEENNTT AAUUDDIITTOORRSS’’ RREEPPOORRTT TTOO TTHHEE UUNNIITTHHOOLLDDEERRSS OOFF AAPPEEXX DDYYNNAAMMIICC FFUUNNDD ((CCOONNTT’’DD)) Auditors’ Responsibilities for the Audit of the Financial Statements (Cont’d)
Conclude on the appropriateness of the Manager’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Fund’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements of the Fund or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Fund to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements of the Fund, including the disclosures, and whether the financial statements of the Fund represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with the Manager regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. OTHER MATTERS This report is made solely to the unitholders of the Fund and for no other purpose. We do not assume responsibility to any other person for the content of this report. Crowe Malaysia PLT Ooi Song Wan LLP0018817-LCA & AF 1018 02901/10/2020 J Chartered Accountants Chartered Accountant Kuala Lumpur 20 February 2020
Apex Dynamic Fund
66.. SSTTAATTEEMMEENNTT BBYY MMAANNAAGGEERR
We, Clement Chew Kuan Hock and Y.M. Dato’ Tunku Ahmad Zahir Bin Tunku Ibrahim, being two of
the directors of Apex Investment Services Berhad, the Manager of Apex Dynamic Fund, do hereby state
that, in the opinion of the Manager, the financial statements set out on pages 14 to 48 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 state of the financial position of Apex Dynamic Fund as at 31
December 2019 and of its financial performance and cash flows for the financial year ended on that date.
For and on behalf of the Manager
Apex Investment Services Berhad
CLEMENT CHEW KUAN HOCK
Director Director
66..11 SSTTAATTEEMMEENNTT OOFF PPRROOFFIITT OORR LLOOSSSS AANNDD OOTTHHEERR CCOOMMPPRREEHHEENNSSIIVVEE IINNCCOOMMEE For The Financial Year Ended 31 December 2019 (Audited)
2019 2018 Note RM RM INVESTMENT INCOME/(LOSS) Gross dividend income 104,421 145,578 Interest income from deposits placed with financial
institutions
2,490 2,277 Realised (loss)/gain on sale of investments (113,941) 54,593 Unrealised gain/(loss) on financial assets at fair value
through profit and loss (“FVPL”)
409,225 (1,168,101) Other income 5,472 8,996 407,668 (956,657) LESS: EXPENSES Management’s fee 4 51,230 83,322 Trustee's fee 5 1,708 2,777 Auditors’ remuneration 7,000 7,000 Tax agent's fee - current financial year 2,500 2,000 - underprovision in the previous financial year 500 1,000 Administrative expenses 2,311 6,398 Transaction costs 7,532 18,736 72,781 121,233 NET INVESTMENT INCOME/(LOSS) 334,887 (1,077,890) FOREIGN EXCHANGE LOSS - REALISED (4,060) (13,351) - UNREALISED (90) (3) NET INCOME/(LOSS) BEFORE TAXATION 330,737 (1,091,244) INCOME TAX EXPENSE 6 (2,355) (4,380) NET INCOME/(LOSS) AFTER TAXATION FOR THE
FINANCIAL YEAR
FINANCIAL YEAR
- realised (80,753) 72,480 - unrealised 409,135 (1,168,104) 328,382 (1,095,624)
The annexed notes form an integral part of these financial statements.
Apex Dynamic Fund
For The Financial Year Ended 31 December 2019 (Audited)
2019 2018 Note RM RM DISTRIBUTION FOR THE FINANCIAL YEAR 7 Net distribution - 400,603 Net distribution per unit - 0.014 Gross distribution per unit - 0.015
The annexed notes form an integral part of these financial statements.
Apex Dynamic Fund
66..22 SSTTAATTEEMMEENNTT OOFF FFIINNAANNCCIIAALL PPOOSSIITTIIOONN As at 31 December 2019 (Audited)
2019 2018 Note RM RM ASSETS INVESTMENT Quoted investments 8 2,898,689 2,897,510 Deposit with a licensed financial institution 9 - 297,171
2,898,689 3,194,681
OTHER ASSETS Sundry receivables 2,051 78 Current tax assets 22,090 22,090 Cash at bank 269,623 212,228
293,764 234,396
TOTAL ASSETS 3,192,453 3,429,077
NET ASSET VALUE (“NAV”) AND LIABILITY NAV Unitholders’ capital 2,769,811 3,333,684 Retained earnings 397,204 68,822
TOTAL NAV 10 3,167,015 3,402,506
LIABILITIES Other payables and accruals 21,179 22,011 Amount owing to Manager 4,122 4,413 Amount owing to Trustee 137 147
TOTAL LIABILITY 25,438 26,571
NUMBER OF UNITS IN CIRCULATION 10.1 19,002,191 22,409,605
NAV PER UNIT (RM) 0.1667 0.1518
The annexed notes form an integral part of these financial statements.
Apex Dynamic Fund
Capital Retained Earnings Total NAV
Note RM RM RM At 1 January 2018 5,515,674 1,565,049 7,080,723 Net loss after taxation/Total
comprehensive expense for the financial year
- (1,095,624) (1,095,624)
Contribution by and distribution to the unitholders of the Fund:
- creation of units 10.1 404,019 - 404,019 - cancellation of units 10.1 (2,586,009) - (2,586,009) - distribution for the financial year 7 - (400,603) (400,603)
Total transactions with unitholders of the Fund
(2,181,990) (400,603) (2,582,593)
At 31 December 2018/1 January 2019 3,333,684 68,822 3,402,506 Net income after taxation/Total
comprehensive income for the financial year
- 328,382 328,382
Contribution by and distribution to the unitholders of the Fund:
- creation of units 10.1 3,990 - 3,990 - cancellation of units 10.1 (567,863) - (567,863)
Total transactions with unitholders of the Fund
(563,873) - (563,873)
At 31 December 2019 2,769,811 397,204 3,167,015
The annexed notes form an integral part of these financial statements.
Apex Dynamic Fund
66..44 SSTTAATTEEMMEENNTT OOFF CCAASSHH FFLLOOWWSS For the Financial Year Ended 31 December 2019 (Audited)
The annexed notes form an integral part of these financial statements.
2019 2018 RM RM CASH FLOWS FROM OPERATING AND INVESTING
ACTIVITIES
Proceeds from sale of investments 1,441,131 3,977,501 Purchase of investments (1,147,026) (1,151,047) Dividend income received 100,016 141,198 Interest income received 8,040 11,195 Management fee paid (51,521) (87,768) Trustee's fee paid (1,718) (2,926) Other fees and expenses paid (20,675) (32,729) Foreign exchange loss (4,060) (13,351) NET CASH FROM OPERATING AND INVESTING ACTIVITIES 324,187 2,842,073 CASH FLOW FOR FINANCING ACTIVITIES Proceeds from units created 3,990 404,019 Payment for cancelled units (567,863) (2,586,009) Net distribution paid - (400,603) NET CASH FOR FINANCING ACTIVITIES (563,873) (2,582,593) NET (DECREASE)/INCREASE IN CASH AND CASH
EQUIVALENTS
(239,686) 259,480 EFFECTS OF FOREIGN CURRENCY EXCHANGE (90) (3) CASH AND CASH EQUIVALENTS AT BEGINNING OF THE
FINANCIAL YEAR
509,399 249,922 CASH AND CASH EQUIVALENTS AT END OF THE
FINANCIAL YEAR 11 269,623 509,399
Apex Dynamic Fund
66..55 NNOOTTEESS TTOO TTHHEE FFIINNAANNCCIIAALL SSTTAATTEEMMEENNTTSS For The Financial Year Ended 31 December 2019 (Audited)
1. THE FUND, THE MANAGER AND THEIR PRINCIPAL ACTIVITIES Apex Dynamic Fund (“the Fund”) was constituted pursuant to the execution of a Deed dated 28 March 2006, First Supplemental Deed dated 20 August 2013, Second Supplemental Deed dated 3 August 2015, between the Manager, Apex Investment Services Berhad, the Trustee and the registered Unitholders of the Fund. Third Supplemental Deed dated 15 April 2016 was executed for the change of Trustee from MTrustee Berhad to Maybank Trustees Berhad. The principal activity of the Fund is to invest in “Permitted Investments” as defined in the Seventh Schedule of the Deed. The Fund commenced operations on 18 May 2006 (commencement date) and will continue its operations until its termination by the Trustee or the Manager as provided under Clauses 12.1, 12.2 and 12.3 of the Deed. The investment objective of the Fund is to seek capital appreciation by investing in equity and equity- related securities. The Manager, Apex Investment Services Berhad, is a company incorporated in Malaysia. The principal activity of the Manager is the management of unit trust funds. The financial statements were approved by the Board of the Directors of the Manager on 20 February 2020.
2. BASIS OF PREPARATION The financial statements of the Fund are prepared under the historical cost convention and modified to include other bases of valuation as disclosed in other sections under significant accounting policies, and in compliance with Malaysian Financial Reporting Standards (“MFRSs”) and International Financial Reporting Standards (“IFRSs”). 2.1 During the current financial year, the Fund has adopted the following new accounting standard(s)
and/or interpretation(s) (including the consequential amendments, if any):-
MFRSs and/or IC Interpretations (Including The Consequential Amendments)
MFRS 16 Leases
Amendments to MFRS 9: Prepayment Features with Negative Compensation
Amendments to MFRS 119: Plan Amendment, Curtailment or Settlement
Amendments to MFRS 128: Long-term Interests in Associates and Joint Ventures
Annual Improvements to MFRS Standards 2015 – 2017 Cycles
The adoption of the above accounting standard(s) and/or interpretation(s) (including the consequential amendments, if any) did not have any material impact on the Fund’s financial statements.
Apex Dynamic Fund
2. BASIS OF PREPARATION (CONT’D)
2.2 The Fund has not applied in advance the following accounting standards and/or interpretations (including the consequential amendments, if any) that have been issued by the Malaysian Accounting Standards Board (MASB) but are not yet effective for the current financial year:-
MFRSs and/or IC Interpretations (Including The Consequential Amendments) Effective Date
MFRS 17 Insurance Contracts 1 January 2021
Amendments to MFRS 3: Definition of a Business 1 January 2020
Amendments to MFRS 9, MFRS 139 and MFRS 7: Interest Rate Benchmark Reform 1 January 2020
Amendments to MFRS 10 and MFRS 128: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture Deferred
Amendments to MFRS 101 and MFRS 108: Definition of Material 1 January 2020
Amendments to References to the Conceptual Framework in MFRS Standards 1 January 2020
The adoption of the above accounting standard(s) and/or interpretation(s) (including the consequential amendments, if any) is expected to have no material impact on the financial statements of the Fund upon their initial application.
3. SIGNIFICANT ACCOUNTING POLICIES 3.1 CRITICAL ACCOUTING ESTIMATES AND JUDGEMENTS
Key Sources of Estimation Uncertainty Management believes that there are no key assumptions made 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 other than as disclosed below:- Income Taxes There are certain transactions and computations for which the ultimate tax determination may be different from the initial estimate. The Fund recognises tax liabilities based on its understanding of the prevailing tax laws and estimates of whether such taxes will be due in the ordinary course of business. Where the final outcome of these matters is different from the amounts that were initially recognised, such difference will impact the income tax expense and deferred tax balances in the year in which such determination is made.
3.2 FUNCTIONAL AND FOREIGN CURRENCIES
(a) Functional and Presentation Currency
The functional currency of the Fund is the currency of the primary economic environment in which the Fund operates. The financial statements of the Fund are presented in Ringgit Malaysia (“RM”) which is the functional and presentation currency of the Fund.
Apex Dynamic Fund
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.2 FUNCTIONAL AND FOREIGN CURRENCIES (CONT’D) (b) Foreign Currency Transactions and Balances
Transactions in foreign currencies are converted into the respective functional currencies on initial recognition, using the exchange rates at the transaction dates. Monetary assets and liabilities at the end of the reporting period are translated at the exchange rates ruling as of that date. Non-monetary assets and liabilities are translated using exchange rates that existed when the values were determined. All exchange differences are recognised in profit or loss.
3.3 INCOME RECOGNITION The income recognition policies for each of the Fund’s major activities are as follows:- (a) Dividend Income
Dividend income from investments is recognised when the right to receive dividend payment is established.
(b) Realised Gains or Losses on Sale of Investments Realised gain or loss on the sale of an investment is recognised when the sales is contracted, based on the sale proceeds less cost which is determined on the weighted average cost basis.
(c) Interest Income Interest income is recognised on a time proportion basis taking into account the principal outstanding and the effective interest rates applicable.
3.4 INCOME TAXES
(a) Current Tax Current tax assets and liabilities are the expected amount of income tax recoverable or payable to the taxation authorities. Current taxes are measured using tax rates and tax laws that have been enacted or substantively enacted at the end of the reporting period and 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 NAV).
(b) Deferred Tax Deferred tax are recognised using the liability method for temporary differences other than those that arise from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on the tax rates that have been enacted or substantively enacted at the end of the reporting period.
Apex Dynamic Fund
3.4 INCOME TAXES (CONT’D)
(b) Deferred Tax (Cont’d) Deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. The carrying amounts of deferred tax assets are reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that the related tax benefits will be realised.
Current and deferred tax items are recognised in correlation to the underlying transactions either in profit or loss, other comprehensive income or directly in NAV. Current tax assets and liabilities or deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same taxable entity (or on different tax entities but they intend to settle current tax assets and liabilities on a net basis) and the same taxation authority.
3.5 FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are recognised in the statement of financial position when the Fund has become a party to the contractual provisions of the instruments. Financial instruments are classified as financial assets, financial liabilities or equity instruments in accordance with the substance of the contractual arrangement and their definitions in MFRS 132. Interests, dividends, gains and losses relating to a financial instrument classified as a liability are reported as an expense or income. Distributions to holders of financial instruments classified as equity are charged directly to NAV. Financial instruments are offset when the Fund has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously. A financial instrument is recognised initially at its fair value (other than trade receivables without significant financial component which are measured at transaction price as defined in MFRS 15 – Revenue from Contracts with Customers at inception). Transaction cost that are directly attributable to the acquisition or issue of the financial instrument (other than a financial instrument at fair value through profit or loss) are added to/deducted from the fair value on initial recognition, as appropriate. Transaction costs on the financial instrument at fair value through profit or loss are recognised immediately in profit or loss. Financial instruments recognised in the statement of financial position are disclosed in the individual policy statement associated with each item. (a) Financial Assets
All recognised financial assets are measured subsequently in their entirety at either their amortised cost or fair value (through profit or loss, or other comprehensive income), depending on the classification of the financial assets.
Apex Dynamic Fund
23
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 3.5 FINANCIAL INSTRUMENTS (CONT’D)
(a) Financial Assets (Cont’d)
Debt Instruments
(i) Amortised Cost
The financial asset is held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest. Interest income is recognised by applying the effective interest rate to the gross carrying amount of the financial asset. When the asset has subsequently become credit-impaired, the interest income is recognised by applying the effective interest rate to the amortised cost of the financial asset. The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts), excluding expected credit losses, through the expected life of the financial asset or a shorter period (where appropriate).
(ii) Fair Value through Other Comprehensive Income The financial asset is held for both collecting contractual cash flows and selling the financial asset, where the asset’s cash flows represent solely payments of principal and interest. Movements in the carrying amount are taken through other comprehensive income and accumulated in the fair value reserve, except for the recognition of impairment, interest income and foreign exchange difference which are recognised directly in profit or loss. Interest income is calculated using the effective interest rate method.
(iii) Fair Value through Profit or Loss All other financial assets that do not meet the criteria for amortised cost or fair value through other comprehensive income are measured at fair value through profit or loss.
The Fund reclassifies debt instruments when and only when its business model for managing those assets change. Equity Instruments All equity investments are subsequently measured at fair value with gains and losses recognised in profit or loss except where the Fund has elected to present the subsequent changes in fair value in other comprehensive income and accumulated in the fair value reserve at initial recognition. The designation at fair value through other comprehensive income is not permitted if the equity investment is either held for trading or is designated to eliminate or significantly reduce a measurement or recognition inconsistency that would otherwise arise.
Apex Dynamic Fund
24
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 3.5 FINANCIAL INSTRUMENTS (CONT’D)
(a) Financial Assets (Cont’d)
Equity Instruments (Cont’d) Dividend income from this category of financial assets is recognised in profit or loss when the Fund’s right to receive payment is established unless the dividends clearly represent a recovery of part of the cost of the equity investments.
(b) Financial Liabilities
(i) Financial Liabilities at Fair Value through Profit or Loss Fair value through profit or loss category comprises financial liabilities that are either held for trading or are designated to eliminate or significantly reduce a measurement or recognition inconsistency that would otherwise arise. The changes in fair value of these financial liabilities are recognised in profit or loss.
(ii) Other Financial Liabilities Other financial liabilities are subsequently measured at amortised cost using the effective interest method. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts), through the expected life of the financial liability or a shorter period (where appropriate).
(c) Equity Instruments Equity instruments classified as equity are measured initially at cost and are not remeasured subsequently. (i) Unitholders’ Capital
Unitholders’ capital are classified as equity and recorded at the proceeds received, net of directly attributable transaction costs. The unitholders’ contributions to the Fund meet the criteria of puttable instruments classified as equity instruments under the revised MFRS 132 Financial Instruments Presentation. Those criteria include:-
the units entitle the holder to a proportionate share of the Fund’s NAV;
the units are the most subordinated class and class features are identical;
there is no contractual obligation to deliver cash or another financial asset other than the Fund to repurchase; and
the total expected cash flows from the units over its life are based on substantially on the profit or loss of the a Fund.
Apex Dynamic Fund
25
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 3.5 FINANCIAL INSTRUMENTS (CONT’D)
(c) Equity Instruments (Cont’d)
(ii) NAV Attributable to Unitholders
NAV attributable to unitholders represents the total NAV in the statement of financial position, which is carried at the redemption amount that would be payable at the end of the reporting period if the unitholders exercised the right to redeem units of the Fund. Units are created or cancelled at prices based on the Fund’s NAV per unit at the time of the creation or cancellation. The Fund’s NAV per unit is calculated by dividing the net assets attributable to the unitholders with the total issued and paid-up units as of that date.
(iii) Distributions Distributions are at the discretion of the Fund. A distribution to the Fund’s unitholders is accounted for as a reduction from realised reserves. A proposed distribution is recognised as a liability in the period in which it is approved.
(d) Derecognition A financial asset or part of it is derecognised when, and only when, the contractual rights to the cash flows from the financial asset expire or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. On derecognition of a financial asset measured at amortised cost, the difference between the carrying amount of the asset and the sum of the consideration received and receivable is recognised in profit or loss. In addition, on derecognition of a debt instrument classified as fair value through other comprehensive income, the cumulative gain or loss previously accumulated in the fair value reserve is reclassified from equity to profit or loss. In contrast, there is no subsequent reclassification of the fair value reserve to profit or loss following the derecognition of an equity investment. A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is discharged or cancelled or expires. 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.
Apex Dynamic Fund
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.6 IMPAIRMENT OF FINANCIAL ASSETS The Fund recognises a loss allowance for expected credit losses on investments in debt instruments that are measured at amortised cost or at fair value through other comprehensive income, trade receivables and contract assets, as well as financial guarantee contracts. The expected credit loss is estimated as the difference between all contractual cash flows that are due to the Fund in accordance with the contract and all the cash flows that the Fund expects to receive, discounted at the original effective interest rate. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument. The Fund always recognises lifetime expected credit losses for trade receivables and contract assets using the simplified approach. The expected credit losses on these financial assets are estimated using a provision matrix based on the Fund’s historical credit loss experience and are adjusted for forward-looking information (including time value of money where appropriate). For all other financial instruments, the Fund recognises lifetime expected credit losses when there has been a significant increase in credit risk since initial recognition. However, if the credit risk on the financial instrument has not increased significantly since initial recognition, the Fund measures the loss allowance for that financial instrument at an amount equal to 12 month expected credit losses. The Fund recognises an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account, except for investments in debt instruments that are measured at fair value through other comprehensive income, for which the loss allowance is recognised in other comprehensive income and accumulated in the fair value reserve, and does not reduce the carrying amount of the financial asset in the statement of financial position.
3.7 CASH AND CASH EQUIVALENTS Cash and cash equivalents comprise cash in hand, bank balances, demand deposits and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value with original maturity periods of three months or less.
3.8 CLASSIFICATION OF REALISED AND UNREALISED GAINS AND LOSSES Unrealised gains and losses comprise changes in the fair value of financial instruments for the period and from reversal of prior period’s unrealised gains and losses for financial instruments which were realised (i.e. sold, redeemed or matured) during the reporting period. Realised gains and losses on disposal of financial instruments classified as part of at fair value
through profit or loss are calculated using the weighted average method. They represent the
difference between an instrument’s initial carrying amount and disposal amount.
Apex Dynamic Fund
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 3.9 OPERATING SEGMENTS
An operating segment is a component of the Fund that engages in business activities from which it may earn revenue and incur expenses, including revenues and expenses that relate to transactions with any of the Fund’s other components. An operating segment’s operating results are reviewed regularly by the chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.
3.10 FAIR VALUE MEASUREMENTS Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using a valuation technique. The measurement assumes that the transaction takes place either in the principal market or in the absence of a principal market, in the most advantageous market. For non-financial asset, the fair value measurement takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. For financial reporting purposes, the fair value measurements are analysed into level 1 to level 3 as follows:- Level 1: Inputs are quoted prices (unadjusted) in active markets for identical assets or liability
that the entity can access at the measurement date; Level 2: Inputs are inputs, other than quoted prices included within level 1, that are
observable for the asset or liability, either directly or indirectly; and Level 3: Inputs are unobservable inputs for the asset or liability. The transfer of fair value between levels is determined as of the date of the event or change in circumstances that caused the transfer.
Apex Dynamic Fund
28
4. MANAGEMENT’S FEE Clause 13.1 of the Deed provides that the Manager is entitled to a management fee computed daily on the net asset value attributable to unitholders of the Fund at a rate not exceeding 2% (2018 - 2%) per annum. The management fee recognised in the financial statements is based on 1.50% (2018 - 1.50%) per annum for the financial year.
5. TRUSTEE’S FEE Trustee is entitled to a fee at such rate as may be agreed from time to time between the Manager and the Trustee. The Trustee’s fee recognised in the financial statements is computed daily at 0.05%(2018 - 0.05%) per annum of the net asset value attributable to unitholders of the Fund.
6. INCOME TAX EXPENSE
2019 2018 RM RM Current tax expense for the financial year 2,355 4,380 A reconciliation of income tax expense applicable to the net income/(loss) before taxation at the statutory tax rate to income tax expense at the effective tax rate of the Fund is as follows:- 2019 2018 RM RM Net income/(loss) before taxation 330,737 (1,091,244) Tax at the statutory tax rate of 24% (2018 - 24%) 79,377 (261,899) Tax effects of:- Non-deductible expenses 17,467 29,096 Non-taxable (income)/loss on investments (94,489) 237,183 Income tax expense for the financial year 2,355 4,380 Domestic income tax is calculated at the Malaysian statutory tax rate of 24% (2018 – 24%) of the
estimated assessable profit for the financial year.
Apex Dynamic Fund
29
7. DISTRIBUTION FOR THE FINANCIAL YEAR Distribution to unitholders in the current financial year was from the following sources:- 2019 2018 RM RM Taxable income Gross dividends - 21,049
Non-taxable income Tax-exempt dividends - 64,512 Profit income from deposits placed with financial
institution - 20,912 Disbursement from REIT - 4,391 Realised gain on sale of equity securities:
- current financial year - 8,867 - previous financial year - 297,157
- 306,024 Other income - 3,641
Gross distribution amount - 420,529
Net distribution amount - 400,603
Units in circulation - 28,035,204
Gross distribution per unit (“RM”) - 0.015 Net distribution per unit (“RM”) - 0.014 Reinvestment/Entitlement date - 9 June 2018
Payment date - 29 June 2018
Apex Dynamic Fund
2019 2018 RM RM Quoted equity investments, at fair value:
- in Malaysia 8.1 1,767,423 2,110,662 - outside Malaysia 8.2 965,166 786,848
2,732,589 2,897,510 Quoted non-equity investments held in
Malaysia, at fair value 8.3 166,100 - 2,898,689 2,897,510
At 31 December 2019 Percentage Number of At At Fair of NAV of Shares Cost Value The Fund RM RM % 8.1 QUOTED EQUITY SECURITIES IN
MALAYSIA
CONSTRUCTION WCT Holdings Berhad 129,298 223,020 112,489 3.55
CONSUMER PRODUCTS & SERVICES Genting Malaysia Berhad 42,000 204,623 138,180 4.36 Hong Leong Industries Berhad 18,000 174,540 187,560 5.92 RGB International Bhd. 462,171 116,057 80,880 2.55 Spritzer Bhd 14,000 30,429 31,500 1.00 Three-A Resources Berhad 290,250 270,881 213,334 6.74
796,530 651,454 20.57
ENERGY Dialog Group Berhad 65,000 125,079 224,250 7.08
FINANCIAL SERVICES ELK-Desa Resources Berhad 58,600 75,201 96,690 3.05 Hong Leong Financial Group Berhad 4,000 65,125 67,600 2.13 Malayan Banking Berhad 4,000 34,418 34,560 1.10
174,744 198,850 6.28
INDUSTRIAL PRODUCTS & SERVICES Malayan Cement Berhad 23,800 58,036 70,210 2.22 SKP Resources Bhd 107,800 160,938 146,608 4.63
218,974 216,818 6.85
Apex Dynamic Fund
8. QUOTED INVESTMENTS (CONT’D)
At 31 December 2019 (Cont’d) Percentage Number of At At Fair of NAV of Shares Cost Value The Fund RM RM % 8.1 QUOTED EQUITY SECURITIES IN
MALAYSIA (CONT’D)
TECHNOLOGY KESM Industries Berhad 17,300 190,052 155,354 4.91 Malaysian Pacific Industries Berhad 18,200 192,007 208,208 6.57
382,059 363,562 11.48
REAL ESTATE Shimao Property Holdings Ltd. 7,000 73,625 111,061 3.51
373,561 379,000 11.97
FINANCIAL PT Puradelta Lestari Tbk. 1,100,000 72,094 97,680 3.08
PROPERTIES PT Bekasi Fajar Industrial Estate Tbk. 1,200,000 107,910 77,760 2.46 Ciputra Development Tbk. PT 390,000 161,970 121,680 3.84 PT Summarecon, Agung Tbk. 270,000 71,779 81,405 2.57
341,659 280,845 8.87
IN PHILIPPINES FINANCIAL Metropolitan Bank & Trust Company 30,510 161,235 163,443 5.16
Apex Dynamic Fund
8. QUOTED INVESTMENTS (CONT’D)
At 31 December 2019 (Cont’d) Percentage Number of At At Fair of NAV of Shares Cost Value The Fund RM RM % 8.2 QUOTED EQUITY INVESTMENTS
OUTSIDE MALAYSIA (CONT’D)
IN SINGAPORE INDUSTRIALS Sembcorp Marine Ltd 11,000 55,848 44,198 1.40
TOTAL QUOTED EQUITY INVESTMENTS
TSR LOANS Hume Industries Bhd - LA 110,000 116,585 166,100 5.24
TOTAL QUOTED NON-EQUITY
INVESTMENTS IN MALAYSIA
116,585 166,100 5.24
TOTAL QUOTED INVESTMENTS 3,041,388 2,898,689 91.53
At 31 December 2018 Percentage Number of At At Fair of NAV of Shares Cost Value The Fund RM RM %
8.1 QUOTED EQUITY SECURITIES IN MALAYSIA
BURSA MALAYSIA SECURITIES MAIN MARKET CONSTRUCTION WCT Holdings Berhad 126,763 223,020 85,565 2.51
CONSUMER PRODUCTS & SERVICES Fraser & Neave Holdings Bhd 2,900 84,841 97,150 2.86 Genting Malaysia Berhad 92,000 448,222 277,840 8.17 Hong Leong Industries Berhad 21,000 203,631 178,500 5.25 RGB International Bhd 462,171 116,057 87,812 2.58 Spritzer Bhd 54,000 117,368 113,400 3.34 Three-A Resources Berhad 310,250 289,546 218,726 6.43
1,259,665 973,428 28.63
Apex Dynamic Fund
8. QUOTED INVESTMENTS (CONT’D)
At 31 December 2018 (Cont’d) Percentage Number of At At Fair of NAV of Shares Cost Value The Fund RM RM % 8.1 QUOTED EQUITY SECURITIES IN
MALAYSIA (CONT’D)
BURSA MALAYSIA SECURITIES MAIN MARKET
ENERGY Coastal Contracts Bhd 38,300 51,569 30,257 0.89 Dialog Group Berhad 99,000 190,505 307,890 9.05
242,074 338,147 9.94
FINANCIAL SERVICES ELK-Desa Resources Berhad 31,600 38,848 37,920 1.11 Hong Leong Financial Group Berhad 8,000 130,250 148,480 4.36
169,098 186,400 5.47
INDUSTRIAL PRODUCTS & SERVICES SKP Resources Bhd 43,800 78,710 45,990 1.35 Wellcall Holdings Berhad 169,800 244,609 205,458 6.04
323,319 251,448 7.39
TECHNOLOGY KESM Industries Berhad 4,900 94,923 37,583 1.10 Malaysian Pacific Industries Berhad 8,600 65,888 85,570 2.51 Unisem (M) Berhad 46,500 129,221 152,521 4.48
290,032 275,674 8.09
TOTAL QUOTED EQUITY
INVESTMENTS IN MALAYSIA
2,507,208 2,110,662 62.03
506,865 440,907 12.96
Apex Dynamic Fund
8. QUOTED INVESTMENTS (CONT’D)
At 31 December 2018 (Cont’d) Percentage Number of At At Fair of NAV of Shares Cost Value The Fund RM RM % 8.2 QUOTED EQUITY INVESTMENTS
OUTSIDE MALAYSIA (CONT’D)
IN INDONESIA
PROPERTIES PT Bekasi Fajar Industrial Estate Tbk. 900,000 84,776 54,288 1.60 Ciputra Development Tbk. PT 390,000 161,970 114,230 3.36
246,746 168,518 4.96
IN SINGAPORE CONSUMER DISCRETION Genting Singapore Ltd 60,000 188,615 177,423 5.21
TOTAL QUOTED EQUITY
INVESTMENTS OUTSIDE MALAYSIA
942,226 786,848 23.13
TOTAL QUOTED INVESTMENTS 3,449,434 2,897,510 85.16
The foreign currency exposure profile of the above quoted investments is the total amount of the equity securities in each country’s stock exchange as disclosed above.
9. DEPOSIT WITH A LICENSED FINANCIAL INSTITUTION The deposit earned an effective interest rate of 3.20% per annum at end of the previous reporting period. The maturity period of the deposit was 7 days.
Apex Dynamic Fund
10. TOTAL NET ASSET VALUE
2019 2018 Note RM RM Unitholders’ capital 10.1 2,769,811 3,333,684 Retained earnings:
- realised reserve 10.2 539,903 620,746 - unrealised reserve 10.3 (142,699) (551,924) 397,204 68,822 3,167,015 3,402,506
10.1 UNITHOLDERS’ CAPITAL
10.2 REALISED RESERVE - DISTRIBUTABLE
2019 2018 RM RM Balance as at beginning of the financial year 620,746 948,872 Net income/(loss) for the financial year 328,382 (1,095,624) Transferred net unrealised (gain)/loss on valuation of
quoted investments transferred to unrealised reserve (409,225) 1,168,101
Net (decrease)/increase in realised reserve during the financial year (80,843) 72,477
Distribution for the financial year - (400,603) Balance as at end of the financial year 539,903 620,746
2019 2018 No. of No. of units RM units RM As at beginning of the financial year 22,409,605 3,333,684 33,915,707 5,515,674 Creation of units 24,173 3,990 2,123,709 404,019 Cancellation of units (3,431,587) (567,863) (13,629,811) (2,586,009) As at end of the financial year 19,002,191 2,769,811 22,409,605 3,333,684
Apex Dynamic Fund
10.3 UNREALISED RESERVE - NON-DISTRIBUTABLE
2019 2018 RM RM Balance as at beginning of the financial year (551,924) 616,177 Transferred unrealised reserve: Transferred net unrealised (loss)/gain on valuation of
quoted investments transferred from realised reserve 409,225 (1,168,101) Balance as at end of the financial year (142,699) (551,924)
11. CASH AND CASH EQUIVALENTS
For the purpose of the statement of cash flows, cash and cash equivalents comprise the following:- 2019 2018 RM RM Cash at bank 269,623 212,228 Deposits with a licensed financial institution (Note 9) - 297,171 269,623 509,399
12. MANAGEMENT EXPENSE RATIO ("MER") 2019 2018 % % MER 1.91 1.91
The management expense ratio includes annual management’s fee, annual trustee’s fee, auditors’ remuneration and other administrative fee and expenses which is calculated as follows:-
MER = (A+B+C+D+E) x 100%
F A = Management’s fee B = Trustee’s fee C = Auditors’ remuneration D = Tax agent’s fee E = Administrative expenses F = Average NAV of the Fund calculated on daily basis The average net asset value of the Fund for the financial year is RM3,416,656 (2018 - RM5,353,256).
Apex Dynamic Fund
13. PORTFOLIO TURNOVER RATIO (“PTR”)
2019 2018 PTR (Times) 0.38 0.47 The portfolio turnover ratio is derived from the following calculation: PTR = (Total acquisitions for the financial year + total disposals for the financial year) ÷ 2
Average NAV of the Fund for the financial year calculated on daily basis Where, total acquisitions for the financial year = RM1,147,026 (2018 - RM1,151,047) total disposals for the financial year = RM1,441,131 (2018 - RM3,927,523)
14. OPERATING SEGMENT Operating segments are prepared in a manner consistent with the internal reporting provided to the Fund Manager as its chief investment decision maker in order to allocate resources to segments and to assess their performance. The Fund Manager requires such information to allocate the Fund’s resources more effectively to the Geographical segment within Asia excluding Japan.
Apex Dynamic Fund
38
14. OPERATING SEGMENT (CONT’D) GEOGRAPHICAL SEGMENT The following table provides an analysis of the results and assets by geographical segments: 2019 Hong Malaysia Kong Indonesia Philippines Others Total RM RM RM RM RM RM INVESTMENT INCOME/(LOSS)
Segment income/(loss)
representing segment results:-
Gross dividend income 65,604 20,621 18,197 - - 104,422 Interest income 2,490 - - - - 2,490 Realised (loss)/gain on
sale of investments (50,038) (51,182) - - (12,721) (113,941) Unrealised gain/(loss) on
valuation of investments 293,077 71,398 43,000 2,209 (459) 409,225 Other income 5,472 - - - - 5,472
316,605 40,837 61,197 2,209 (13,180) 407,668
Unallocated expenditure (72,781)
Net investment income 334,887 Foreign exchange profit/(loss)
- realised - 134 (2,114) (1,949) (131) (4,060) - unrealised - (16) (9) (41) (24) (90)
- 118 (2,123) (1,990) (155) (4,150)
Net income before taxation
ASSETS Investment:-
Other assets - unallocated 293,764
14. OPERATING SEGMENT (CONT’D) GEOGRAPHICAL SEGMENT (CONT’D)
2018 Hong South Malaysia Kong Indonesia Korea Others Total RM RM RM RM RM RM INVESTMENT INCOME/(LOSS)
Segment income/(loss)
representing segment results:-
Gross dividend income 100,252 14,731 11,710 12,619 6,266 145,578 Interest income 2,277 - - - - 2,277 Realised gain/(loss) on
sale of investments 881,883 (586,986) (369,226) 115,599 13,323 54,593 Unrealised (loss)/gain on
valuation of investments (1,007,887) (114,430) 206,115 (191,240) (60,659) (1,168,101) Other income 8,993 3 - - - 8,996
(14,482) (686,682) (151,401) (63,022) (41,070) (956,657)
Unallocated expenditure (121,233)
- realised - (178) (10,898) 164 (2,439) (13,351) - unrealised - - (3) - - (3)
- (178) (10,901) 164 (2,439) (13,354)
Net loss before taxation (1,091,244) Income tax expense (4,380)
Net loss after taxation (1,095,624)
ASSETS Investment:- Quoted investments/
Segmental assets 2,110,662 440,907 168,518 - 177,423 2,897,510 Deposit with a licensed
financial institution 297,171 - - - - 297,171
Other assets - unallocated 234,396
40
15. UNITS HELD BY THE MANAGER AND DIRECTORS OF THE MANAGER There were no units in the Fund held by the Manager or directors of the Manager as at 31 December 2019 (2018 - NIL).
16. TRANSACTIONS BY THE FUND WITH BROKERS
The transactions entered into by the Fund by value of trade with brokers during the financial year were as follows:-
2019 BROKERS Value of trade Brokerage fees
RM % RM %
Maybank Investment Bank Berhad 1,044,706 42.39 1,615 46.09 Affin Hwang Investment Bank Berhad 574,921 23.33 1,195 34.11 CIMB Investment Bank Berhad 381,904 15.50 550 15.67 DBS Vikers Securities Singapore Pte Ltd 223,228 9.06 145 4.13 CCB International Securities Limited 87,320 3.54 - - Others 152,520 6.18 - - 2,464,599 100.00 3,505 100.00
2018 BROKERS Value of trade Brokerage fees
RM % RM %
CIMB Investment Bank Berhad 1,976,028 39.03 4,196 39.29 Maybank Investment Bank Berhad 1,440,108 28.44 3,085 28.88 Affin Hwang Investment Bank Berhad 1,401,113 27.67 3,205 30.00 CCB International Securities Limited 118,922 2.35 - - TA Securities Holdings Berhad 63,934 1.27 128 1.20 DBS Vickers Securities Singapore Pte Ltd 62,798 1.24 68 0.63 5,062,903 100.00 10,682 100.00
Apex Dynamic Fund
17. RELATED PARTY DISCLOSURES
17.1 IDENTITIES OF RELATED PARTIES The Fund has related party relationships with its Manager, Apex Investment Services Berhad and its Trustee, Maybank Trustees Berhad.
17.2 In addition to the balances detailed elsewhere in the financial statements, the Fund carried out the following transactions with the related parties during the financial year:-
2019 2018 RM RM Apex Investment Services Berhad: - management’s fee 51,230 83,322 Maybank Trustees Berhad: - trustee’s fee 1,708 2,777
18. FOREIGN EXCHANGE RATES
The principal closing foreign exchange rates used (expressed on the basis of one unit of foreign currency to RM equivalent) for the translation of foreign currency balances at the end of the reporting period are as follows:- 2019 2018 RM RM United States Dollar 4.1335 4.1360 Singapore Dollar 3.0440 3.0329 Hong Kong Dollar 0.5254 0.5279 Indonesian Rupiah 0.0003 0.0003 Philippines Peso 0.0808 -
19. FINANCIAL INSTRUMENTS The Fund's activities are exposed to a variety of market risk (including foreign currency risk, interest rate risk and equity price risk), credit risk and liquidity risk. The Fund’s overall financial risk management policy focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Fund’s financial performance.
19.1 FINANCIAL RISK MANAGEMENT POLICIES The policies in respect of the major areas of treasury activity are as follows:- (a) Foreign Currency Risk
The Fund is exposed to foreign currency risk on transactions and balances that are denominated in currencies other than Ringgit Malaysia. The currencies giving rise to this risk are primarily United States Dollar, Hong Kong Dollar, Indonesian Rupiah, Singapore Dollar and Philippines Peso. Foreign currency risk is monitored closely on an ongoing basis to ensure that the net exposure is at an acceptable level.
Apex Dynamic Fund
19.1 FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)
(a) Foreign Currency Risk (Cont’d) The Fund’s exposure to foreign currencies risk based on the carrying amounts of the financial instruments at the end of the reporting period is summarised below:- Foreign Currency Exposure (Cont’d) UNITED HONG STATES KONG INDONESIAN PHILIPPINES SINGAPORE RINGGIT DOLLAR DOLLAR RUPIAH PESO DOLLAR MALAYSIA TOTAL 2019 RM RM RM RM RM RM RM Financial Assets Quoted investments - 379,000 378,525 163,443 44,198 1,933,523 2,898,689 Sundry receivables - - - - - 2,051 2,051 Cash at bank 8,345 - - - - 261,278 269,623
8,345 379,000 378,525 163,443 44,198 2,196,852 3,170,363
-
Net financial assets 8,345 379,000 378,525 163,443 44,198 2,171,414 3,144,925 Less: Net financial assets denominated in the
Fund’s functional currency - - - - - (2,171,414) (2,171,414) 207,641 Net Currency Exposure 8,345 379,000 378,525 163,443 44,198 - 973,511
Apex Dynamic Fund
19.1 FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)
(a) Foreign Currency Risk (Cont’d) The Fund’s exposure to foreign currencies risk based on the carrying amounts of the financial instruments at the end of the reporting period is summarised below:- Foreign Currency Exposure (Cont’d)
UNITED HONG STATES KONG INDONESIAN SINGAPORE RINGGIT DOLLAR DOLLAR RUPIAH DOLLAR MALAYSIA TOTAL 2018 RM RM RM RM RM RM Financial Assets Quoted investments - 440,907 168,518 177,423 2,110,662 2,897,510 Deposit with a licensed financial institution - - - - 297,171 297,171 Sundry receivables - - - - 78 78 Cash at bank 296 - - - 211,932 212,228
296 440,907 168,518 177,423 2,619,843 3,406,987
Financial Liabilities Sundry payables and accruals - - - - 22,011 22,011 Amount owing to Manager - - - - 4,413 4,413 Amount owing to Trustee - - - - 147 147
- - - - 26,571 26,571
Net financial assets 296 440,907 168,519 177,422 2,593,272 3,380,416 Less: Net financial assets denominated in the
Fund’s functional currency - - - - (2,593,272) (2,593,272) Net Currency Exposure 296 440,907 168,519 177,422 - 787,144
Apex Dynamic Fund
19.1 FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)
(b) Interest Rate Risk The Fund does not have any interest rate bearing balances at the end of the current reporting period, hence is not exposed to interest rate risk.
(c) Particular Stock Risk Any major price fluctuations of a particular stock invested by the Fund may adversely or favourably impact the NAV of the Fund. However, due to the diversification nature of the unit trust, the impact would not be as major as investing in one particular stock. Particular stock risk sensitivity The Manager’s best estimate of the effect on the net income/(loss) for the financial year and other comprehensive income due to a reasonable possible change in equity indices, with all other variables held constant is indicated in the table below:- Effects on income/ (loss) for the Effects on financial year equity Change in (decrease)/ (decrease)/ equity price increase increase FTSE Bursa Malaysia KLCI RM RM 2019 + 1% 27,326 27,326 - 1% (27,326) (27,326) 2018 + 1% (21,107) 21,107 - 1% 21,107 (21,107) An equivalent decrease in each of the indices shown above would have resulted in an equal, but opposite impact. In practice, the actual trading results may differ from the sensitivity analysis above and the difference could be material. Investments in ACE Market, Derivative Instruments and REITs are not significant for sensitivity analysis purposes.
Apex Dynamic Fund
19.1 FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)
(c) Particular Stock Risk (Cont’d) Particular stock risk concentration The Fund’s concentration of equity price risk analysed by the Fund’s equity instruments by sector is as follows: 2019 2018 As a % of As a % of Investment Sector RM NAV RM NAV Consumer Products
& Services 651,454 20.57 973,428 28.63 Financial Services 459,973 14.52 346,680 10.18 Technology 363,562 11.48 275,674 8.09 Property 280,845 8.87 168,518 4.96 Energy 224,250 7.08 338,147 9.94 Industrial Products &
Services 216,818 6.85
251,448 7.39 Consumer
Discretionary 179,426 5.67
344,017 10.11 TSR Loans 166,100 5.24 - - Construction 112,489 3.55 85,565 2.51 Real Estate 111,061 3.51 - - Materials 88,513 2.79 114,033 3.35 Industrials 44,198 1.40 - - 2,898,689 91.53 2,897,510 85.16
(d) Liquidity and Cash Flows Risk Liquidity risk refers to the ease to convert investments into cash without significantly incurring loss in value. Stocks issued by smaller companies will face a greater chance of liquidity risk as compared to stocks issued by larger companies. When investing in stocks of smaller companies, the historical volume traded would be analysed to minimise the liquidity risk.
(e) Fund Manager’s Risk The performance of the Fund is also influenced by the expertise of the Fund Manager. The investment committee will oversee the activities and performance of the Fund Manager. There is also the risk that the Fund Manager does not adhere to the investment mandate of the Fund. The investment committee and the compliance unit hold primary functions to ensure that the Fund’s investment strategy and mandate are adhered to. A compliance checklist and investment performance report shall be presented for review during the investment committee meeting.
Apex Dynamic Fund
19.1 FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)
(f) Credit Risk
The Fund’s exposure to credit risk, or the risk of counterparties defaulting, arises mainly from sundry receivables.
Credit risk concentration profile The Fund does not have any major concentration of credit risk related to any individual customer or counterparty.
Exposure to credit risk
As the Fund does not hold any collateral, the maximum exposure to credit risk is represented by the carrying amount of the financial assets as at the end of the reporting period. Assessment of Impairment Losses At each reporting date, the Fund assesses whether any of the financial assets at amortised cost are credit impaired. The gross carrying amounts of financial assets are written off when there is no reasonable expectation of recovery (i.e. the debtor does not have assets or sources of income to generate sufficient cash flows to repay the debt) despite the fact that they are still subject to enforcement activities. Receivables The Fund applies the simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all receivables.
The expected loss rates are based on the payment profiles of sales over a period of 12 months from the measurement date and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle their debts.
The information about the exposure to credit risk and the loss allowances calculated under MFRS 9 for receivables is summarised below:-
Gross Lifetime Loss Carrying Amount Allowance Amount 2019 RM RM RM Current (not past due) 2,051 - 2,051 2018 Current (not past due) 78 - 78
Cash at Bank
The Fund considers cash at bank to have low credit risk. Therefore, the Fund is of the view that the loss allowance is immaterial and hence, it is not provided for.
Apex Dynamic Fund
19. FINANCIAL INSTRUMENTS (CONT’D)
19.2 CAPITAL RISK MANAGEMENT The Manager of the Fund manages the capital of the Fund by maintaining an optimal capital structure so as to support its businesses and maximise unitholders value. To achieve this objective, the Manager of the Fund may make adjustments to the capital structure in view of changes in economic conditions, such as adjusting the amount of dividend payment, returning of capital to unitholders or undertake a unit splitting exercise to lower the value per unit of the Fund, thus the units become more affordable to raise more funds.
19.3 CLASSIFICATION OF FINANCIAL INSTRUMENTS
2019 2018 RM RM Financial Assets Mandatorily at Fair Value Through Profit or Loss Quoted investments 2,898,689 2,897,510 Amortised Cost Deposit with a licensed financial institution - 297,171 Sundry receivables 2,051 78 Cash at bank 269,623 212,228 3,170,363 3,406,987 Financial Liability Amortised Cost Accruals 21,179 22,011 Amount owing to Manager 4,122 4,413 Amount owing to Trustee 137 147 25,438 26,571
19.4 GAINS OR LOSSES ARISING FROM FINANCIAL INSTRUMENTS
2019 2018 RM RM
Financial Assets Mandatorily at Fair Value Through Profit or Loss Net gain/(loss) recognised in profit or loss 399,705 (967,930)
Amortised Cost Net gain/(loss) recognised in profit or loss (including forex) 3,812 (2,081)
Apex Dynamic Fund
19. FINANCIAL INSTRUMENTS (CONT’D)
19.5 FAIR VALUE INFORMATION Other than those disclosed below, the fair values of the financial assets and financial liabilities of the Fund which are maturing within the next 12 months approximated their carrying amounts due to the relatively short-term maturity of the financial instruments. The fair values of these assets are included in level 1 of the fair value hierarchy. Fair Value of Financial Instruments
Carried At Fair Value Total Fair Carrying Level 1 Level 2 Level 3 Value Amount 2019 RM RM RM RM RM Financial Asset Quoted investments 2,898,689 - - 2,898,689 2,898,689 2018 Financial Asset Quoted investments 2,897,510 - - 2,897,510 2,897,510 The Fund measures its quoted investments that are classified as financial assets at their fair values, determined at their quoted closing bid prices at the end of the reporting period. These financial assets belong to level 1 of the fair value hierarchy. There were no transfer between level 1 and level 2 during the financial year.
Apex Dynamic Fund
Manager Apex Investment Services Berhad 199701004894 (420390-M)
Registered Office 3rd Floor, Menara MBSB No. 46, Jalan Dungun, Damansara Heights, 50490 Kuala Lumpur
Board of Directors Clement Chew Kuan Hock Executive and Non-Independent Director
Wong Fay Lee Non-Executive and Non-Independent Director
Y.M. Dato’ Tunku Ahmad Zahir bin Tunku Ibrahim
Non-Executive and Independent Director
Investment Committee
Independent Member
Clement Chew Kuan Hock Non-Independent Member
Azran bin Osman Rani Independent Member
Secretary Ng Kee Tiong (MIA 10631) No. 47-1, Jalan SS 18/6 47500 Subang Jaya, Selangor Darul Ehsan
Ng Chin Chin (MAICSA 7042650) No. 47-1, Jalan SS 18/6 47500 Subang Jaya, Selangor Darul Ehsan
Trustee Maybank Trustees Berhad (5004-P) 8th Floor, Menara Maybank 100 Jalan Tun Perak 50050 Kuala Lumpur
Auditor and Reporting Accountant
Crowe Malaysia PLT (LLP0018817-LCA & AF 1018) Level 16, Tower C Megan Avenue II 12, Jalan Yap Kwan Seng 50450 Kuala Lumpur
Taxation Advisers Mazars Taxation Services Sdn Bhd (579747-A) Chartered Accountants Wisma Selangor Dredging 7th Floor, South Block 142A, Jalan Ampang 50450 Kuala Lumpur
Apex Dynamic Fund