United Income Plus Fund

Annual Report 31 July 2020

UNITED INCOME PLUS FUND

Audited Annual Report and Financial Statements For the Financial Year Ended 31 July 2020

TABLE OF CONTENTS PAGE NO

(A) MANAGER’S REPORT 2

(B) TRUSTEE’S REPORT 10

(D) INDEPENDENT AUDITORS' REPORT TO THE UNIT HOLDERS 12

(E) FINANCIAL STATEMENTS

STATEMENT OF FINANCIAL POSITION 16

STATEMENT OF COMPREHENSIVE INCOME 17

STATEMENT OF CHANGES IN NET ASSET VALUE 18

STATEMENT OF CASH FLOWS 19

NOTES TO THE FINANCIAL STATEMENTS 20

(F) CORPORATE INFORMATION 47

1 (A) MANAGER’S REPORT

Dear Unitholders,

We are pleased to present you the Manager’s report and the audited accounts of United Income Plus Fund (the “Fund”) for the financial year ended 31 July 2020.

(1) Key Data of the Fund

1.1 Fund name United Income Plus Fund (the "Fund") 1.2 Fund category Fixed Income 1.3 Fund type Income & Growth 1.4 Investment The Fund seeks to provide investors with income and capital appreciation over objective the Medium to Long Term (i.e. a period of three (3) years or more) by investing primarily in fixed income securities with the remaining investing in equities and equity-related securities. 1.5 Performance With effective from 13 August 2015, the performance benchmark of the Fund benchmark has been changed as follows: • 70% 12 month fixed deposit rate by Malayan Banking Berhad; (available at www.maybank2u.com.my) • 30% FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) (available at www.bursamalaysia.com)

Prior to that, the performance benchmark of the Fund was: • 35% Quantshop All MGS Index; (available at www.quantshop.com) • 35% J.P. Morgan Asia Credit Investment Grade Index; (available at www.jpmorgan.com) • 15% FBM KLCI; and (available at www.bursamalaysia.com) • 15% MSCI AC Asia Pacific ex Japan (available at www.msci.com) 1.6 Duration The Fund was launched on 9 February 2015 and shall exist for as long as it appears to the Manager and Trustee that it is in the interests of the unit holders for it to continue. In some circumstances, the unit holders can resolve at a meeting to terminate the Fund. 1.7 Distribution policy Subject to the availability of income, distribution will be paid on a quarterly basis. Distribution declared (if any) will be automatically reinvested into the unit holders’ accounts in the form of additional units in the Fund at no cost. 1.8 Breakdown of unit As at 31 July 2020 holdings by size Size of holding No. of No. of units held unit holders • 5,000 and below 0 0.00 • 5,001 to 10,000 5 45,400.18 • 10,001 to 50,000 3 56,262.84 • 50,001 to 500,000 7 1,033,796.00 • 500,001 and above 7 89,030,848.74 Total 22 90,166,307.76

2 (2) Performance Data of the Fund

2.1 Portfolio Details of portfolio composition of the Fund for the financial years as at 31 composition July are as follows: Sectors, category of As at 31 As at 31 July As at 31 July investments & cash holdings July 2020 2019 2018 (%) (%) (%) Consumer Products 11.07 5.91 4.92 Financials 27.46 29.70 43.62 Industrial Products 3.31 4.54 3.35 Trading / Services 14.98 14.11 9.71 CIS 16.73 10.45 -- Infrastructure 6.26 4.67 10.45 Construction -- 7.96 5.64 Technology 4.08 4.61 -- Real Estate 1.96 -- 9.39 Information Technology -- -- 6.21 Telecommunication 4.53 2.59 1.36 Government ------Transport ------Trusts ------Energy -- 1.88 1.68 Utilities ------ETF -- -- 0.63 Cash 9.62 13.58 3.04 Total 100.00 100.00 100.00

2.2 Performance Performance details of the Fund for the three audited financial years are as details follows: As at As at As at 31 July 2020 31 July 2019 31 July 2018 Net Asset Value ("NAV") (RM) 50,526,967 38,060,547 53,308,439 NAV per unit (RM) 0.5604 0.5498 0.5208 Units in circulation 90,166,308 69,222,499 102,357,400 Highest NAV per unit (RM) 0.5652 0.5599 0.5732 Lowest NAV per unit (RM) 0.5092 0.5020 0.4999 Total return (%) 5.76 10.17 0.28 • Capital growth (%) 1.95 5.57 -3.88 • Income distribution (%) 3.81 4.60 4.16 Gross distribution (sen per unit) 2.03# 2.28 2.26 Net distribution (sen per unit) 2.03# 2.28 2.26 Management expense ratio 1.431 1.63 1.56 ("MER") (%) Portfolio turnover ratio 1.022 1.12 1.06 ("PTR") (times) Notes: # Date of distribution is shown in part 2.7 - Income distribution / Unit splits. 1 MER is lower against previous financial year mainly due to increase in average NAV. 2 PTR is lower against previous financial year mainly due to lower trading activity.

3 2.2 Performance Average total return details As at 31 July 2020 (%) (continued) (annualised) Since commencement 6.97 (2 March 2015) 1 year 5.74 3 years 5.32 5 years 5.84

Annual total return Financial year ended 31 July (%) 2020 5.76 2019 10.17 2018 0.28 2017 2.89 2016 10.52 Since commencement (2 March 8.48 2015) - 31 July 2015 Note: Past performance is not necessarily indicative of future performance and that unit prices and investment returns may go down, as well as up.

2.3 Has the Fund The Fund registered a return of 44.10% since commencement, outperforming achieved its the benchmark return of 13.06%. The Fund achieved its investment objective investment of providing investors with income and capital appreciation. The Fund objective? declared an income distribution of 2.03 sen per unit for the financial year under review.

2.4 Performance For the financial year under review, the Fund registered a return of 5.76% review outperforming the benchmark return of 1.35%. The outperformance was due to stock selection within the equity portion of the portfolio and higher bond prices on the back of declining bond yields. Among the top contributors to the portfolio performance included Top Glove, TSMC and Amazon. Additionally, the portfolio's duration positioning and credit selection also contributed to the outperformance.

For the financial year under review, the NAV per unit of the Fund increased by 1.95% from RM 0.5495 to RM 0.5604.

The line chart below shows comparison between the performance of the Fund and its benchmark, 70% 12 month fixed deposit rate by Malayan Banking Berhad and 30% FBM KLCI as at the commencement date of the Fund to 31 July 2020.

4 2.4 Performance review (continued)

1- 3- 6- 12- Since month months months months commencement The Fund 2.42% 5.70% 4.47% 5.76% 44.10% Benchmark* 2.17% 4.54% 2.25% 1.35% 13.06% Source: UOBAM(M), Lipper and Bloomberg as at 31 July 2020. * The benchmark of the Fund is 70% 12 month fixed deposit rate by Malayan Banking Berhad and 30% FBM KLCI with effective from 13 August 2015.

* Prior to that, the benchmark of the Fund was 35% Quantshop All MGS Index; 35% J.P. Morgan Asia Credit Investment Grade Index; 15% FBM KLCI and 15% MSCI AC Asia Pacific ex Japan.

Note: Past performance is not necessarily indicative of future performance and that unit prices and investment returns may go down, as well as up. 2.5 Strategies and Equities policies employed We focused on global market leaders to form core of equity holdings. Despite the volatile market conditions during the financial year under review, the fund managed to outperform due to stock selection. Among the top contributors to the portfolio performance included Top Glove, TSMC and Amazon.

5 2.5 Strategies and Fixed Income policies employed (continued) For fixed income, we invested mainly in Ringgit corporate bonds and Asia credits. We continued to favour Ringgit corporate debts as we expect the market to be supported by demand from local investors due to ample market liquidity and expectations of a prolonged low interest rate environment. In addition, we also invested in Asia credits, especially investment grade issues, that offer relatively attractive yields compared to the developed markets.

2.6 Asset allocation This table below shows the asset allocation of the Fund for the financial years ended 31 July.

Assets As at 31 As at 31 July Changes July 2020 2019 (%) (%) (%) Equities 26.67 19.53 -5.94 Fixed income securities 63.71 66.89 -4.60 Cash 9.62 13.58 10.54 Total 100.00 100.00 --

Reason for the differences in asset allocation As at 31 July 2020, the asset allocation of the Fund stood at 26.67% in equities, 63.71% in fixed income securities and 9.62% in cash. We capitalized on market weakness to add to our equity positions.

2.7 Income For the financial year under review, the Fund has declared the following distribution/ income distribution: Unit splits Distribution Date Gross/Net Cum - NAV Ex - NAV per Distribution per unit unit (RM) per unit (RM) (RM) 29 October 2019 0.0042 0.5490 0.5448 22 January 2020 0.0041 0.5533 0.5492 14 April 2020 0.0040 0.5348 0.5308 14 July 2020 0.0040 0.5634 0.5594 22 July 2020 0.0040 0.5635 0.5595 Total 0.0203

The Fund did not carry out any unit split exercise during the financial year under review.

2.8 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 unit holders during the financial year under review.

6 2.9 Rebates and soft It is our policy to channel all rebates to the Fund. Soft commissions received commission from brokers/dealers are retained by the Manager only if the goods and services provided are of demonstrable benefit to unit holders of the Fund and in the form of research and advisory services that assist in the decision making process relating to the Fund's investments and such dealings are executed on terms which are the most favourable for the Fund.

During the financial year under review, the Manager had received on behalf of the Fund, soft commissions in the form of fundamental database, financial wire services, technical analysis software and stock quotation system incidental to investment management of the Fund. These soft commissions received by the Manager are deemed to be beneficial to the unit holders of the Fund. 2.10 Market review Equity

Global equity markets were volatile during the financial year under review. Global equities weakened in August due to fears of a recession and an escalation in the United States of America (“US”)-China trade war. The inversion of the US Treasury curve (proxied by the 2-10 year spread) spooked financial markets. Later on, markets rebounded due to positive developments in the trade negotiations between US and China.

However, market jitters emerged around end of January due to the COVID-19 outbreak which started in China. The outbreak spread globally and World Health Organizaton (“WHO”) declared COVID-19 a pandemic. To contain the spread of the pandemic, many countries took the drastic measure of a full or partial lockdown. Global markets tumbled on fears that the lockdown would lead to a recession.

Global markets bottomed in March 2020 as investors reacted positively to aggressive fiscal and monetary response by governments globally led by the US. In a bold move, the US government approved a USD2 trillion stimulus package while the US Federal Reserve (“Fed”) reduced its benchmark interest rate to 0-0.25% and committed to unlimited quantitative easing. Additionally, positive results from containment measures and re-opening of economies by governments also helped calm global markets.

As global markets sentiment improved on the unprecedented monetary and fiscal packages by governments globally, the FTSE Bursa Malaysia KLCI (“FBM KLCI”) recovered most of its year-to-date losses towards the end of June 2020. In addition, the recovery in the local bourse was helped by the outperformance of glove manufacturer component stocks. Share price of glove manufacturers rallied on strong earnings growth expectation as the pandemic resulted in increased demand and selling prices for gloves. Besides that, local market sentiment was further lifted by the return of retail participation which resulted in an increase in average trading volumes.

7 2.10 Market review Fixed Income (continued) Global bond yields declined in August on safe haven bids amid escalating trade tensions between US and China and concerns about global economic growth. Strong demand drove the benchmark 10-year US Treasury yield to fall below the 2-year yield for the first time since 2005.

In early 2020, global bond yields continued to decline driven by heightened risk aversion following the escalation of the COVID-19 cases globally.

Local debts saw strong buying interest as Bank Negara Malaysia (“BNM”) reduced the Overnight Policy Rate (“OPR”) by 25 basis point (“bps”) each in January 2020 and March 2020 to 2.50%. However, bond yields subsequently moved higher following portfolio outflows from emerging markets, a sharp decline in crude oil price and an escalation of domestic COVID-19 cases.

In response to the impact from COVID-19, the Fed delivered an emergency 50 bps interest rate cut on 3 March 2020 followed by another 100 bps cut on 15 March 2020, bringing the federal funds rate to 0.00-0.25%. The rate cut on 3 March 2020 was the first inter-meeting policy easing by the Fed since the 2008 financial crisis.

In May 2020, BNM reduced the policy rate further by 50 bps to 2.00%. Healthy demand on expectations of a protracted period of low interest rate environment given the uncertainty of the pace of economic recovery drove yields lower across the board.

Meanwhile, S&P Global Ratings reaffirmed Malaysia’s long term foreign currency credit rating at A- but revised its rating outlook to negative from stable. The revision was mainly attributed to additional downside risk to fiscal metrics and heightened policy uncertainty. The government has expanded its fiscal stimulus to RM295 billion and the fiscal deficit is now projected to increase to 5.8%-6.0% of gross domestic product (“GDP”) in 2020.

BNM reduced the OPR by another 25 bps to a record low of 1.75% in July. This brings the cumulative rate cuts to 125 bps since January 2020. This move would provide additional policy stimulus to support the economic recovery as downside risks to the growth outlook remain, especially if there is a resurgence of COVID-19 infections.

At the end of the period, the 10-year US Treasury yield fell 148 bps to 0.53% while the 10-year Malaysian Government Securities (“MGS”) yield decreased 104 bps to 2.55%.

8 2.11 Market outlook Equities

The International Monetary Fund (“IMF”) expects a recession in 2020 with the global economy forecast to contract by 4.9%. This is due to the economic disruption caused by COVID-19. However, IMF expects a recovery in economic activity in 2021.

At this juncture, the number of new COVID-19 cases remains high amid the re- opening of economies by many countries. Several countries are experiencing subsequent waves after appearing to control the outbreak. Developments on COVID-19 would continue to have an impact on the market. Additionally, the escalation of tensions between the US and China could pose a threat to the global economy.

As global equities have recovered strongly from the lows in March 2020, market sentiment could be affected by these headwinds in the near term. Sizeable monetary and fiscal stimulus packages by governments globally could mitigate equities downside risk. Positive news from the vaccine development front could also help to control COVID-19 and calm equity

Amidst the uncertainties, we would focus on stock selection to generate outperformance. We would focus on global market leaders to form core of equity holdings.

Fixed Income

The Fed maintained the Fed funds rate at 0.0%- 0.25% in July and is committed to using its full range of tools to support the US economy in this challenging period. The Fed chair Jerome Powell warned that the path of the economy recovery will depend significantly on the course of the virus. The recent increase in COVID-19 cases could weigh on economic activity and that a full economic recovery is unlikely until people feel safe to engage in a broad range of economic activities. Meanwhile, the Fed also signaled that interest rate would remain near zero through 2022.

Going forward, Ringgit and US Dollar debts are likely to remain well supported as the low interest rate environment is expected to stay for longer given the uncertainly of the pace of economic recovery. We would exercise more stringent credit selections given the weak economic conditions and focus on investment grade corporate credits for yield pick-up.

Kuala Lumpur, Malaysia UOB Asset Management (Malaysia) Berhad

23 September 2020

9 (B) TRUSTEE’S REPORT

TO THE UNIT HOLDERS OF UNITED INCOME PLUS FUND

We have acted as Trustee for United Income Plus Fund (“the Fund”) for the financial year ended 31 July 2020. To the best of our knowledge, for the financial year under review, UOB Asset Management (Malaysia) Berhad (“the Manager”) has operated and managed the Fund in accordance with the following:

(a) limitations imposed on the investment powers of the Manager under the Deed(s), the Securities Commission’s Guidelines on Unit Trust Funds, the Capital Markets and Services Act 2007 and other applicable laws;

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

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

We are of the view that the distributions made during this financial year ended 31 July 2020 by the Manager are not inconsistent with the objective of the Fund.

For Deutsche Trustees Malaysia Berhad

Ng Hon Leong Richard Lim Hock Seng Head, Trustee Operations Chief Executive Officer

Kuala Lumpur, Malaysia 23 September 2020

# (C) STATEMENT BY MANAGER

UNITED INCOME PLUS FUND

We, Lim Suet Ling and Seow Lun Hoo, being two of the directors of UOB Asset Management (Malaysia) Berhad, do hereby state that, in the opinion of the Manager, the accompanying financial statements set out on pages 16 to 46 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 United Income Plus Fund as at 31 July 2020 and of its financial performance, changes in net asset value and cash flows for the financial year then ended and comply with requirements of the Deed(s).

For and on behalf of the Manager, UOB Asset Management (Malaysia) Berhad

LIM SUET LING SEOW LUN HOO Executive Director / Director Chief Executive Officer

Kuala Lumpur, Malaysia 23 September 2020

# (D) Independent auditors’ report to the unitholders of United Income Plus Fund

Report on the audit of the financial statements

Opinion

We have audited the financial statements of United Income Plus Fund (“the Fund”), which comprise the statement of financial position as at 31 July 2020, and the statement of 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 16 to 46.

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

Basis for opinion

We conducted our audit in accordance with approved standards of 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 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.

Information other than the financial statements and auditors’ report thereon

The Manager is responsible for the other information. The other information comprises the information included in the annual report of the Fund, but does not include the financial statements of the Fund and our auditors’ report thereon. The annual report is expected to be made available to us after the date of this auditors' report.

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.

# Independent auditors’ report to the unitholders of United Income Plus Fund (continued)

Information other than the financial statements and auditors’ report thereon (continued)

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.

When we read the annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to the Manager of the Fund and take appropriate action.

Responsibilities of the Manager and Trustee for the financial statements

The Manager is responsible for the preparation and fair presentation of the financial statements of the Fund in accordance with MFRS and IFRS. 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 but 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.

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 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.

# Independent auditors’ report to the unitholders of United Income Plus Fund (continued)

Auditors’ responsibilities for the audit of the financial statements (continued)

As part of an audit in accordance with approved standards of auditing in Malaysia and International Standards on Auditing, we exercise professional judgment and maintain professional skepticism 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.

• Conclude on the appropriateness of 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.

# Independent auditors’ report to the unitholders of United Income Plus Fund (continued)

Other Matter

This report is made solely to the unitholders of the Fund, as a body, and for no other purpose. We do not assume responsibility to any other person for the content of this report.

Ernst & Young PLT Chan Hooi Lam 202006000003 (LLP0022760-LCA) & AF 0039 No. 2844/02/2022 J Chartered Accountants Chartered Accountant

Kuala Lumpur, Malaysia 23 September 2020

# (E) FINANCIAL STATEMENTS

UNITED INCOME PLUS FUND

STATEMENT OF FINANCIAL POSITION AS AT 31 JULY 2020

2020 2019 Note RM RM ASSETS Investments 3 47,596,841 33,195,307 Forward foreign currency contracts 4 15,376 - Amount due from brokers - 2,983,795 Dividend receivables - 48,578 Deposits with a licensed financial institution 5 - 1,400,115 Cash at bank 5,065,614 600,546 TOTAL ASSETS 52,677,831 38,228,341

LIABILITIES Forward foreign currency contracts 4 - 15,709 Amount due to Manager 6 65,785 114,274 Amount due to Trustee 7 2,852 2,217 Amount due to brokers 2,047,386 - Accruals 34,841 35,594 TOTAL LIABILITIES 2,150,864 167,794

UNITHOLDERS’ EQUITY Unitholders’ capital 8 44,683,590 33,127,597 Retained earnings 8 5,843,377 4,932,950 TOTAL EQUITY, REPRESENTING NET ASSET VALUE (“NAV”) ATTRIBUTABLE TO UNITHOLDERS 8 50,526,967 38,060,547

TOTAL EQUITY AND LIABILITIES 52,677,831 38,228,341

UNITS IN CIRCULATION 8 (a) 90,166,308 69,222,499

NET ASSET VALUE PER UNIT (RM) 0.5604 0.5498

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

# UNITED INCOME PLUS FUND

STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31 JULY 2020

2020 2019 Note RM RM INVESTMENT INCOME Dividend income from quoted equities 27,535 188,371 Income distributions from financial assets at fair value through profit or loss (“FVTPL”) 268,996 20,194 Interest income from unquoted fixed income securities 1,110,162 1,412,999 Interest income from deposits with licensed financial institution 147,077 34,357 Other income 55 - Net gain on investments at FVTPL: 3 - net realised gain on sale of investments at FVTPL 1,395,175 998,503 - net unrealised gain on changes in fair value 8(c) 558,453 1,702,222 Net amortisation of premium (14,845) (4,809) Net realised loss on foreign currency exchange (66,529) (83,615) Net realised (loss)/gain on forward foreign currency contracts (259,492) 35,604 Net unrealised gain on foreign currency exchange 8(c) 45 1,409 Net unrealised gain/(loss) on forward foreign currency contracts 8(c) 31,086 (15,710) 3,197,718 4,289,525

EXPENSES Manager’s fee 9 (552,478) (604,483) Trustee’s fee 10 (29,749) (28,580) Auditors’ remuneration (9,300) (9,300) Tax agent’s fee (4,600) (7,000) Other expenses (10,245) (17,160) (606,372) (666,523) NET INCOME BEFORE TAXATION 2,591,346 3,623,002 Tax expense 11 (6,238) (4,167)

NET INCOME AFTER TAXATION, REPRESENTING TOTAL COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR 2,585,108 3,618,835

Net income after taxation is made up of the following: Realised amount 8(b) 1,995,524 1,930,914 Unrealised amount 8(c) 589,584 1,687,921 2,585,108 3,618,835

Distributions for the financial year 12 1,674,681 1,657,699

The accompanying notes form an integral part of the financial statements. 17

# UNITED INCOME PLUS FUND

STATEMENT OF CHANGES IN NET ASSET VALUE FOR THE FINANCIAL YEAR ENDED 31 JULY 2020

Unitholders’ Retained Total net asset capital earnings value Note RM RM RM

Balance as at 1 August 2018 50,336,625 2,971,814 53,308,439

Movement in net asset value: Total comprehensive income for the financial year - 3,618,835 3,618,835 Creation of units 8(a) 7,370,592 - 7,370,592 Reinvestment of units 8(a) 1,657,699 - 1,657,699 Cancellation of units 8(a) (26,237,319) - (26,237,319) Distributions 12 - (1,657,699) (1,657,699)

Balance as at 31 July 2019 33,127,597 4,932,950 38,060,547

Balance as at 1 August 2019 33,127,597 4,932,950 38,060,547

Movement in net asset value: Total comprehensive income for the financial year - 2,585,108 2,585,108 Creation of units 8(a) 35,486,893 - 35,486,893 Reinvestment of units 8(a) 1,674,538 - 1,674,538 Cancellation of units 8(a) (25,605,438) - (25,605,438) Distributions 12 - (1,674,681) (1,674,681)

Balance as at 31 July 2020 44,683,590 5,843,377 50,526,967

The accompanying notes form an integral part of the financial statements. 18

# UNITED INCOME PLUS FUND

STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 JULY 2020

2020 2019 Note RM RM CASH FLOWS FROM OPERATING AND INVESTING ACTIVITIES Proceeds from sale/redemption of investments 40,020,589 53,345,332 Purchase of investments (47,426,725) (36,445,838) Dividend received from quoted equities 76,158 142,810 Income distributions received from financial assets at FVTPL 268,996 20,194 Interest received from unquoted fixed income securities 1,084,730 1,607,896 Interest received from deposits with licensed financial institutions 147,077 34,357 Other income received 55 - Manager’s fee paid (542,385) (630,850) Trustee’s fee paid (29,114) (29,610) Tax agent’s fee paid (4,600) (4,585) Auditors’ remuneration paid (9,300) (9,299) Payment of other fees and expenses (10,998) (15,776) Foreign withholding tax (6,238) (4,167) Net realised (loss)/gain on forward foreign currency contracts (259,492) 35,604 Net realised loss on foreign currency exchange (66,529) (83,615) Net cash (used in)/generated from operating and investing activities (6,757,776) 17,962,453

CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from creation of units 34,723,239 7,047,352 Payment for cancellation of units (24,900,367) (26,021,827) Distribution paid (143) - Net cash generated from/(used in) financing activities 9,822,729 (18,974,475)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 3,064,953 (1,012,022)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE FINANCIAL YEAR 2,000,661 3,012,683 CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR 5,065,614 2,000,661

Cash and cash equivalents comprise the following: Deposits with a licensed financial institution 5 - 1,400,115 Cash at bank 5,065,614 600,546 5,065,614 2,000,661

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

# UNITED INCOME PLUS FUND

NOTES TO THE FINANCIAL STATEMENTS

1. INFORMATION ON THE FUND, THE MANAGER AND THEIR PRINCIPAL ACTIVITIES

The United Income Plus Fund (hereinafter referred to as “the Fund”) was constituted pursuant to the execution of the Deed dated 30 April 2014 as amended by a First Supplemental Deed dated 26 February 2015 and Second Supplemental Deed dated 2 January 2019 (collectively referred to as “the Deeds”) between UOB Asset Management (Malaysia) Berhad (“the Manager”) and Deutsche Trustees Malaysia Berhad (“the Trustee”).

The Fund seeks to provide investors with income and capital appreciation over the medium to long term by investing primarily in fixed income securities with the remaining investing in equities and equity-related securities. The Fund was launched on 9 February 2015 and commenced for operation on 2 March 2015. As provided in the Master Deed, the accrual period or financial year shall end on 31 July.

The Manager is a subsidiary of UOB Asset Management Limited, headquartered in Singapore.

The financial statements were authorised for issue by the Manager on 23 September 2020.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation of the financial statements

The financial statements of the Fund have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRS”) and International Financial Reporting Standards (“IFRS”).

The financial statements have been prepared on the historical-cost basis except as disclosed in the accounting policies below and are presented in Ringgit Malaysia (“RM”).

2.2 Summary of significant accounting policies

(a) Financial instruments

Classification

In accordance with MFRS 9, the Fund classifies its financial assets and financial liabilities at initial recognition into the categories of financial assets and financial liabilities discussed below.

In applying that classification, a financial asset or financial liability is considered to be held for trading if:

(a) It is acquired or incurred principally for the purpose of selling or repurchasing it in the near term; or

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.2 Summary of significant accounting policies (continued)

(a) Financial instruments (continued)

Classification (continued)

In applying that classification, a financial asset or financial liability is considered to be held for trading if (continued):

(b) On initial recognition, it is part of a portfolio of identified financial instruments that are managed together and for which, there is evidence of a recent actual pattern of short-term profit-taking; or,

(c) It is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument).

Financial assets

The Fund classifies its financial assets as subsequently measured at amortised cost or measured at fair value through profit or loss ("FVTPL") on the basis of both the entity’s business model for managing the financial assets and the contractual cash flow characteristics of the financial asset.

(i) Financial assets measured at amortised cost

A debt instrument is measured at amortised cost if it is held within a business model whose objective is to hold financial asset 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 ("SPPI") on the principal amount outstanding. The Fund includes in this category bank balances.

(ii) Financial assets at FVTPL

A financial asset is measured at FVTPL if:

(a) Its contractual terms do not give rise to cash flows on specified dates that are SPPI on the principal amount outstanding; or

(b) It is held within a business model whose objective is to sell; or

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.2 Summary of significant accounting policies (continued)

(a) Financial instruments (continued)

Financial assets (continued)

(ii) Financial assets at FVTPL (continued)

A financial asset is measured at FVTPL if (continued):

(c) At initial recognition, it is irrevocably designated as measured at FVTPL when doing so eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring assets or liabilities or recognising the gains and losses on them on different bases.

The Fund includes in this category debt and equity instruments. These include investments that are held under a business model to manage them on a fair value basis for investment income and fair value gains.

Financial liabilities

(i) Financial liabilities measured at FVTPL

A financial liability is measured at FVTPL if it meets the definition of held for trading. The Fund does not have such liabilities at this juncture.

(ii) Financial liabilities measured at amortised cost

This category includes all financial liabilities, other than those measured at FVTPL. The Fund includes in this category amount due to Manager, amount due to Trustee, and amount due to brokers.

Impairment of financial assets

The Fund holds only trade receivables with no financing component and which have maturities of less than 12 months at amortised cost and, as such, has chosen to apply an approach similar to the simplified approach for expected credit losses ("ECL") under MFRS 9 to all its trade receivables. Therefore the Fund does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECL at each reporting date. The Fund’s approach to ECL reflects a probability-weighted outcome, the time value of money and 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.

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.2 Summary of significant accounting policies (continued)

(b) Classification of realised and unrealised gains and losses

Unrealised gains and losses comprise changes in the fair value of financial instruments at FVTPL. Realised gains and losses on disposals of financial instruments at FVTPL are calculated using weighted average method. They represent the difference between an instrument’s initial carrying amount and disposal amount.

Return on investments, income distribution from collective investment schemes, foreign exchange translation differences of cash at a bank balances denominated in foreign currencies and accrued interest on deposits which have not matured as at the reporting date are classified as realised income in the financial statements.

Derivatives are financial assets or liabilities at FVTPL categorised as held for trading unless they are designated hedges.

The Fund’s derivative financial instruments comprise forward foreign currency contracts. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value.

The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and the nature of the item being hedged. Derivatives that do not qualify for hedge accounting are classified as held for trading and accounted for in accordance with the accounting policy on FVTPL.

(d) Functional and presentation currency

The financial statements of the Fund are measured using the currency of the primary economic environment in which the Fund operates (“the functional currency”). The financial statements are presented in RM, which is also the Fund’s functional currency.

(e) Foreign currency translation

Transactions in currencies other than the Fund’s functional currency (foreign currencies) are recorded in the functional currency using exchange rates prevailing at the transaction dates. At each reporting date, foreign currency monetary items are translated into RM at exchange rates ruling at the reporting date. All exchange gains or losses are recognised in the profit or loss.

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.2 Summary of significant accounting policies (continued)

(f) Unitholders’ capital

Unitholders’ capital of the Fund meets the definition of puttable instruments classified as equity instruments under the revised MFRS 132 Financial Instruments: Presentation and is classified as equity instruments. Any distribution to unitholders is recorded as a reduction from retained earning within equity.

(g) Distribution of income

Distribution of income is made at the discretion of the Manager. A distribution to the Fund’s unitholders is accounted for as a deduction from realised reserves except where distribution is sourced out of distribution equalisation which is accounted for as a deduction from unitholders’ capital. A proposed distribution is recognised as a liability in the period in which it is approved.

(h) Cash and cash equivalents

Cash and cash equivalents comprise deposits with a licensed financial institution and cash at a bank with a maturity of less than 3 months which have an insignificant risk of changes in value.

(i) Income recognition

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.

(j) Net asset value attributable to unitholders

Net asset value attributable to unitholders represents the redemption amount that would be payable if the unitholders exercised the right to redeem units of the Fund at the end of the reporting year.

(k) Income tax

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 by the reporting date.

No deferred tax is recognised as there are no material temporary differences.

(l) Segment reporting

For internal management reporting purposes, all of the investments of the Fund are managed as one portfolio and reviewed as such by the Manager. The Manager is the decision maker for performance assessment purposes and makes decisions about resource allocation. Accordingly, the Fund does not have any operating segment information to be disclosed in the financial statements. 24

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.2 Summary of significant accounting policies (continued)

(m) Significant accounting estimates and judgments

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.

No major judgments have been made by the Manager in applying the Fund’s accounting policies. There are no key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

3. INVESTMENTS

2020 2019 RM RM

Investments designated as FVTPL: - Collective investment schemes - foreign 8,811,266 3,976,500 - Quoted investments - local - 6,325,650 - Quoted investments - foreign 14,045,859 1,107,736 - Unquoted fixed income securities 24,739,716 21,785,421 47,596,841 33,195,307

2020 2019 RM RM Net gain on investments at FVTPL comprised: - net realised gain on sale of investments at FVTPL 1,395,175 998,503 - net unrealised gain on changes in fair value 558,453 1,702,222 1,953,628 2,700,725

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3. INVESTMENTS (CONTINUED)

Investments designated as FVTPL as at 31 July 2020 are as follows:

Fair value Expressed as a Percentage of Value of The Name of Counter Quantity Cost Fair Value Fund RM RM %

COLLECTIVE INVESTMENT SCHEMES - FOREIGN

United Asian Bond Fund - Class USD 1,800,000 6,318,881 6,299,572 12.47 United Emerging Markets Bond Fund - Class USD 650,000 2,528,292 2,511,694 4.97

TOTAL COLLECTIVE INVESTMENT SCHEMES - FOREIGN 8,847,173 8,811,266 17.44

QUOTED INVESTMENTS - FOREIGN

Hong Kong

Real estate KWG Property Holding Limited 150,000 1,100,069 1,032,897 2.04

Telecommunication Services Tencent Holdings Limited 3,700 755,374 1,083,530 2.14

Singapore

Consumer staples Wilmar International Limited 85,000 1,088,213 1,208,691 2.39

United States

Consumer discretionary Alibaba Group Holding Limited 1,250 1,131,233 1,338,574 2.65 Amazon.Com, Inc. 80 822,478 1,034,465 2.05 Sony Corporation 3,700 1,136,542 1,230,950 2.44 Vipshop Holdings Limited 11,000 1,009,628 1,015,567 2.01 4,099,881 4,619,556 9.15

Financials Citigroup Inc. 4,200 924,510 905,252 1.79

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3. INVESTMENTS (CONTINUED)

Investments designated as FVTPL as at 31 July 2020 are as follows (continued): Fair value Expressed as a Percentage of Value of The Name of Counter Quantity Cost Fair Value Fund RM RM %

QUOTED INVESTMENTS - FOREIGN (CONTINUED)

United States (continued)

Industrials Products Lockheed Martin Corporation 580 890,859 938,062 1.86 Raytheon Technologies Corporation 3,300 863,394 803,411 1.59 1,754,253 1,741,473 3.45

Information Technology Microsoft Corporation 1,000 911,689 863,924 1.71 Taiwan Semiconductor Manufacturing Co. Ltd. 3,800 864,405 1,286,921 2.55 1,776,094 2,150,845 4.26

Telecommunication Services Alphabet Inc. 200 1,020,046 1,303,615 2.58

TOTAL QUOTED INVESTMENTS - FOREIGN 12,518,440 14,045,859 27.80

Fair value Expressed as a Percentage of Nominal Adjusted Value of The Maturity Credit Value Cost Fair Value Fund Date Issuer Rating RM RM RM %

UNQUOTED FIXED INCOME SECURITIES

CORPORATE BONDS

25.05.2021 CIMB Group Holdings Berhad A1 4,700,000 4,749,292 4,846,018 9.59

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3. INVESTMENTS (CONTINUED)

Investments designated as FVTPL as at 31 July 2020 are as follows (continued):

Fair value Expressed as a Percentage of Nominal Adjusted Value of The Maturity Credit Value Cost Fair Value Fund Date Issuer rating RM RM RM %

UNQUOTED FIXED INCOME SECURITIES (CONTINUED)

CORPORATE BONDS (CONTINUED)

07.02.2022 Affin Bank Berhad A1 2,000,000 2,052,559 2,119,879 4.20 15.03.2022 AmBank (M) Berhad AA3 1,800,000 1,835,292 1,901,478 3.76 29.03.2022 Al Dzahab Assets Berhad AAA 2,500,000 2,541,616 2,628,041 5.20 13.12.2024 Malaysia Airport Holdings Berhad AA2 700,000 732,498 760,763 1.51 22.08.2025 GENM Capital Berhad AAA(S) 1,000,000 1,021,345 1,098,325 2.17 25.09.2026 Danainfra Nasional Berhad NR 1,000,000 1,011,713 1,062,203 2.10 31.03.2027 GENM Capital Berhad AAA(S) 3,000,000 3,050,346 3,327,636 6.59 20.04.2028 UMW Holdings Berhad A1 3,000,000 3,244,872 3,460,528 6.85 04.06.2029 Pengurusan Air SPV Berhad AAA 1,000,000 1,006,594 1,098,644 2.17 02.08.2030 United Overseas Bank (Malaysia) Berhad AA1 1,000,000 1,000,000 1,000,000 1.98

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3. INVESTMENTS (CONTINUED)

Investments designated as FVTPL as at 31 July 2020 are as follows (continued):

Fair value Expressed as a Percentage of Nominal Adjusted Value of The Maturity Credit Value Cost Fair Value Fund Date Issuer rating RM RM RM %

UNQUOTED FIXED INCOME SECURITIES (CONTINUED)

CORPORATE BONDS (CONTINUED)

30.06.2033 Cypark Ref Sdn Bhd AA3 1,000,000 1,027,997 1,091,757 2.16 23.08.2033 Lebuhraya Duke Fasa 3 Sdn Berhad AA- IS 300,000 341,662 344,444 0.68

TOTAL UNQUOTED FIXED INCOME SECURITIES 23,615,786 24,739,716 48.96

TOTAL INVESTMENTS 44,981,399 47,596,841 94.20

EXCESS OF FAIR VALUE OVER ADJUSTED COST 2,615,442

The weighted average effective yield on unquoted fixed income securities is as follows:

2020 2019 % %

Corporate bonds 3.34 4.16

Analysis of the remaining maturity by nominal value of unquoted fixed income securities as at 31 July 2020 and 31 July 2019 are as follows:

Less than 1 1 year to More than year 5 years 5 years RM RM RM 2020 Corporate bonds 4,700,000 7,000,000 11,300,000

2019 Corporate bonds - 14,000,000 6,700,000

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4. FORWARD FOREIGN CURRENCY CONTRACTS

As at the date of statement of financial position, there are 3 (2019: 3) forward foreign currency contracts outstanding.

The notional principal amount of the outstanding forward foreign currency contracts amounted to RM 5,190,067 (2019: RM 5,223,796).

The forward foreign currency contracts entered into were for hedging against the currency exposure arising from the investments denominated in United States Dollar (USD).

As the Fund has not adopted hedge accounting, the change in fair value of the forward foreign currency contract is recognised immediately in profit or loss.

5. DEPOSITS WITH A LICENSED FINANCIAL INSTITUTION

2020 2019 RM RM

Deposits with a licensed financial institution - 1,400,115

Deposits with a licensed financial institution include interest receivables of Nil (2019: RM 115).

2020 2019

Weighted average effective interest rate - 3.00

Average maturities - 2 days

6. AMOUNT DUE TO MANAGER

2020 2019 RM RM

Creation of units 1,086,894 323,240 Cancellation of units (1,099,526) (394,456) Manager's fee payable (53,153) (43,058) (65,785) (114,274)

The normal credit period for the Manager’s fee payable is one month (2019: one month).

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7. AMOUNT DUE TO TRUSTEE

2020 2019 RM RM

Amount due to Trustee 2,852 2,217

Amount due to Trustee represents Trustee’s fee payable.

8. UNITHOLDERS’ EQUITY

Net asset value attributable to unitholders is represented by:

2020 2019 Note RM RM

Unitholders’ capital (a) 44,683,590 33,127,597 Retained earnings - Realised gain (b) 3,238,991 2,918,148 - Unrealised gain (c) 2,604,386 2,014,802 5,843,377 4,932,950 Total equity, representing NAV attributable to unitholders 50,526,967 38,060,547

(a) UNITHOLDERS’ CAPITAL/ UNITS IN CIRCULATION

2020 2019 Units RM Units RM At the beginning of the financial year 69,222,499 33,127,597 102,357,400 50,336,625 Creation of units during the financial year 64,980,589 35,486,893 13,514,798 7,370,592 Reinvestment for the financial year 3,053,060 1,674,538 3,125,651 1,657,699 Cancellation of units during the financial year (47,089,840) (25,605,438) (49,775,350) (26,237,319) At the end of the financial year 90,166,308 44,683,590 69,222,499 33,127,597

The Manager and parties related to the Manager did not hold any units in the Fund as at 31 July 2020 (2019: Nil).

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8. UNITHOLDERS’ EQUITY (CONTINUED)

(b) RETAINED EARNINGS - REALISED

2020 2019 RM RM

At the beginning of the financial year 2,918,148 2,644,933 Total comprehensive income for the financial year 2,585,108 3,618,835 Net unrealised gain attributable to investments and others held transferred to unrealised reserve (589,584) (1,687,921) Distributions for the financial year (1,674,681) (1,657,699) Net increase in realised reserve for the financial year 320,843 273,215 At the end of the financial year 3,238,991 2,918,148

2020 2019 RM RM

At the beginning of the financial year 2,014,802 326,881 Net unrealised gain attributable to investments and others held transferred to unrealised reserve: - Investments at FVTPL 558,453 1,702,222 - Forward foreign currency contracts 31,086 (15,710) - Foreign currency exchange 45 1,409 589,584 1,687,921 At the end of the financial year 2,604,386 2,014,802

9. MANAGER'S FEE

Schedule 8 of the Deed provides that the Manager shall be entitled to a fee at a rate agreed between the Manager and the Trustee which the rate shall not exceed 2.00% (2019: 2.00%) per annum of the net asset value of the Fund, calculated on a daily basis.

The management fee provided in the financial statements is 1.50% (2019: 1.50%) per annum based on the net asset value of the Fund, calculated on a daily basis for the financial year.

There will be no further liability to the Manager in respect of Manager’s fee other than the amount recognised in the financial statements.

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10. TRUSTEE'S FEE

Schedule 9 of the Deed provides that the Trustee shall be entitled to a fee at a rate agreed between the Manager and the Trustee which the rate shall not exceed 0.20% (2019: 0.20%) per annum of the net asset value of the Fund, calculated on a daily basis; subject to a minimum fee of RM15,000 (2019: RM15,000) per annum (excluding foreign custodian fees and charges).

The Trustee’s fee provided in the financial statements is 0.07% (2019: 0.07%) per annum based on the net asset value of the Fund, calculated on a daily basis for the financial year.

There will be no further liability to the Trustee in respect of Trustee’s fee other than the amount recognised in the financial statements.

11. INCOME TAX EXPENSE

Income from deposit placements is exempted from tax in accordance with Schedule 6, Paragraph 35A of the Income Tax Act, 1967 ("ITA"), subject to certain exclusion. Distribution income derived from sources outside Malaysia and received in Malaysia is exempted from tax in accordance with Schedule 6, Paragraph 28 of the ITA. Pursuant to Section 61(1)(b) of the ITA, gains from realisation of investment will not be treated as income of the Fund and hence are not subject to income tax.

A reconciliation of income tax expense applicable to net income before taxation at the statutory income tax rate to income tax expense at the effective income tax rate of the Fund is as follows:

2020 2019 RM RM

Net income before taxation 2,591,346 3,623,002

Tax calculated at a tax rate of 24% 621,923 869,520 Tax effects of: - Income not subject to tax (809,151) (1,053,324) - Loss not deductible for tax purposes 41,699 23,838 - Restriction on tax deductible expenses for unit trust funds 134,826 149,555 - Expenses not deductible for tax purposes 10,703 10,411 (621,923) (869,520) Income tax for the financial period - - Foreign withholding tax 6,238 4,167 Tax expense for the financial year 6,238 4,167

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12. DISTRIBUTIONS

Final distributions to unitholders is derived from the following sources: 2020 2019 RM RM

Realised income from previous financial year - 2,328,389 Gross dividend 266,409 - Interest income 1,114,681 - Other income 49 - Net realised gain on sale of investment 1,095,263 - Net realised loss on foreign currency exchange (189,111) - 2,287,291 2,328,389 Less: Expenses (606,372) (666,523) Tax expense (6,238) (4,167) (612,610) (670,690) Net distributable amount 1,674,681 1,657,699

Details of distributions to unitholders during the financial year are as follows:

Distributions Reinvestment Distributions Total Ex-date settlement date per unit distributions RM RM Financial year ended 31 July 2020

29 October 2019 30 October 2019 0.0042 306,386 22 January 2020 23 January 2020 0.0041 319,782 14 April 2020 15 April 2020 0.0040 357,438 14 July 2020 15 July 2020 0.0040 340,082 22 July 2020 23 July 2020 0.0040 350,993 0.0203 1,674,681

Financial year ended 31 July 2019

29 October 2018 30 October 2018 0.0040 335,251 28 January 2019 29 January 2019 0.0040 310,474 25 April 2019 26 April 2019 0.0040 273,580 12 July 2019 15 July 2019 0.0040 272,123 29 July 2019 31 July 2019 0.0068 466,271 0.0228 1,657,699

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13. MANAGEMENT EXPENSE RATIO (“MER”) 2020 2019 % %

Manager’s fee* 1.30 1.48 Trustee’s fee 0.07 0.07 Other expenses 0.06 0.08 Total MER 1.43 1.63

* Manager's fee net of Target Fund's management fee

The MER of the Fund is the ratio of the sum of fees and expenses incurred by the Fund to the average NAV of the Fund calculated on a daily basis.

14. PORTFOLIO TURNOVER RATIO (“PTR”) 2020 2019

PTR (times) 1.02 1.12

The PTR of the Fund is the ratio of average acquisitions and disposals of the Fund for the financial period to the average NAV of the Fund calculated on a daily basis.

15. TRANSACTIONS WITH BROKERS AND FINANCIAL INSTITUTIONS

Details of transactions with brokers and financial institutions by the Fund for the financial year ended 31 July 2020 are as follows: Percentage Percentage of total Value of of total Brokerage brokerage Brokers/Financial institutions trades trades fees fees RM % RM % CLSA Limited (Hong Kong) 23,714,605 20.10 9,605 8.51 Berhad* 14,010,000 11.88 - - China International Capital Corporation Hong Kong Securities Limited 13,816,771 11.71 40,662 36.03 Deutsche Bank (Malaysia) Bhd 10,361,834 8.78 - - UOB Kay Hian Securities (M) Sdn Bhd.* 5,271,853 4.47 13,910 12.32 J.P. Morgan Securities LLC 5,095,543 4.32 2,173 1.93 CGS – CIMB Securities Sdn. Bhd 4,891,423 4.15 13,403 11.88 Affin Hwang Investment Bank Berhad 3,596,951 3.06 10,488 9.29 Hong Leong Bank Berhad 3,113,284 2.64 - - Others 15,782,465 13.38 22,621 20.04 117,954,729 100.00 112,862 100.00

* Entities related to the Manager. 35

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16. FINANCIAL INSTRUMENTS

(a) Classification of financial instruments

The Fund’s financial assets and financial liabilities are measured on an ongoing basis based on their respective classification. The significant accounting policies in Note 2.2 describe how the classes of financial instruments are measured and how income and expenses are recognised:

(i) the Fund’s investments, comprising quoted equities, collective investment schemes and unquoted fixed income securities, are classified as financial assets at FVTPL which are measured at fair value;

(ii) the Fund’s other financial assets, comprising amount due from brokers, dividend receivables, deposits with a licensed financial institution and cash at a bank, are classified as financial assets which are measured at amortised cost;

(iii) the Fund’s financial liabilities, comprising amount due to Manager, amount due to Trustee and amount due to brokers, are classified as other financial liabilities which are measured at amortised cost; and

(iv) the Fund’s forward foreign currency contracts are derivatives which are measured at FVTPL.

Financial Financial Financial assets and assets at liabilities at liabilities at amortised amortised FVTPL cost cost Total RM RM RM RM 2020 Assets Investments 47,596,841 - - 47,596,841 Forward foreign currency contracts 15,376 - - 15,376 Cash at bank - 5,065,614 - 5,065,614

Total financial assets 47,612,217 5,065,614 - 52,677,831

Liabilities Amount due to Manager - - 65,785 65,785 Amount due to Trustee - - 2,852 2,852 Amount due to brokers - - 2,047,386 2,047,386

Total financial liabilities - - 2,116,023 2,116,023

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16. FINANCIAL INSTRUMENTS (CONTINUED)

(a) Classification of financial instruments (continued)

Financial Loans and Financial assets and receivables at liabilities at liabilities at amortised amortised FVTPL cost cost Total RM RM RM RM 2019 Assets Investments 33,195,307 - - 33,195,307 Amount due from brokers - 2,983,795 - 2,983,795 Dividend receivables - 48,578 48,578 Deposits with licensed financial institutions - 1,400,115 - 1,400,115 Cash at bank - 600,546 - 600,546

Total financial assets 33,195,307 5,033,034 - 38,228,341

Liabilities Forward foreign currency contracts 15,709 - - 15,709 Amount due to Manager - - 114,274 114,274 Amount due to Trustee - - 2,217 2,217

Total financial liabilities 15,709 - 116,491 132,200

(b) Financial instruments that are carried at fair value

The Fund uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

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.

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16. FINANCIAL INSTRUMENTS (CONTINUED)

(b) Financial instruments that are carried at fair value (continued)

The following table shows an analysis of financial instruments recorded at fair value by the level of the fair value hierarchy: Level 1 Level 2 Level 3 Total RM RM RM RM 2020 Financial instruments at FVTPL - Collective investment schemes - 8,811,266 - 8,811,266 - Forward foreign currency contracts - 15,376 - 15,376 - Quoted investments 14,045,859 - - 14,045,859 - Unquoted fixed income securities - 24,739,716 - 24,739,716 14,045,859 33,566,358 - 47,612,217

2019 Financial instruments at FVTPL - Collective investment schemes - 3,976,500 - 3,976,500 - Forward foreign currency contracts - (15,709) - (15,709) - Quoted investments 7,433,386 - - 7,433,386 - Unquoted fixed income securities - 21,785,421 - 21,785,421 7,433,386 25,746,212 - 33,179,598

(c) Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximations 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:

• Cash at bank • Amount due to Manager • Amount due to Trustee • Amount due to brokers

There were no financial instruments which are not carried at fair values and whose carrying amounts are not reasonable approximation of their respective fair values.

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17. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Fund is exposed to a variety of risks including market risk, manager risk, inflation risk, non- compliance risk, currency risk, liquidity risk, credit risk, interest rate risk, geographical risk and income distribution risk.

Financial risk management is carried out through internal control processes adopted by the Manager and adherence to the investment restrictions as stipulated in the SC Guidelines on Unit Trust Funds.

(a) Market risk

Market risk refers to potential losses that may arise from changes in the market conditions which in turn affect the market prices of the investments of the Fund. Market conditions are generally affected by, amongst others, social environment, political and economic stability. The Fund that seeks to invest in various geographical markets will be subjected to risks arising from general and sector specific economic conditions in the markets in which the Fund invests. However, if one of the markets which the Fund invests in suffers a downturn or instability due to economic and/or political conditions, the possible adverse impact on the Fund’s value may be softened by the fact that the Fund is also invested in other markets that are not experiencing similar downturn or instability. In the event the downturn or instability affects multiple markets within the region or globally, the benefits of diversification in multiple markets enjoyed by the Fund will be reduced as each of the markets it invests in experiences the downturn or instability.

The Fund’s overall exposure to market risk was as follows: 2020 2019 RM RM

Investments at FVTPL 47,596,841 33,195,307

The table below summarises the sensitivity of the Fund’s net asset value and net income after taxation to movements in prices of investments. The analysis is based on the assumption that the price of the investments fluctuates by 5% with all other variables held constant.

Impact on Change in profit after price of Market tax and net investments value asset value % RM RM 2020 -5 45,216,999 (2,379,842) 0 47,596,841 - 5 49,976,683 2,379,842

2019 -5 31,535,542 (1,659,765) 0 33,195,307 - 5 34,855,072 1,659,765

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17. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

(b) Manager risk

The performance of the Fund depends on, amongst other things, the expertise of the Manager. A failure on the part of the Manager to display the requisite experience and expertise expected of them in making investment decisions for the Fund may jeopardize the Fund’s performance and

Inflation risk is a risk of an investor’s investment not growing at a rate that keeps pace with inflation rate, thereby decreasing the investor’s purchasing power even though the investment in monetary terms may have increased.

(d) Non-compliance risk

Non-adherence with laws, rules, regulations, prescribed practices, internal policies and procedures may result in tarnished reputation, limited business opportunities and reduced expansion potential for the management company. Investment goals may also be affected should the Manager not adhere to the investment mandate, such as the Fund’s investment objective and investment policy and strategy. The non-adherence may be the outcome from human error (for instance the oversight of the Manager) or system failure (causing unnecessary downtime). The magnitude of such risk and its impact on the Fund and/or unitholders are dependent on the nature and severity of the non- compliance. In order to mitigate this risk, the Manager has stringent internal controls and ensures that compliance monitoring processes are undertaken.

(e) Currency risk

This risk is associated with investments denominated in currencies different from the base currency of the Fund. As the Fund is denominated in RM, investments in countries other than Malaysia will cause the Fund to be exposed to currency risks. When foreign currencies move unfavourably against the RM, these investments may face currency loss in addition to any capital gains or losses, which will affect the net asset value of the Fund, and consequently the net asset value per unit of the Fund. The Manager may mitigate this risk by hedging the foreign currency exposure. However, by employing this hedging, it will limit the potential upside of these currencies where investors would not be able to enjoy the additional returns when these currencies move favourably against the RM.

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17. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

(e) Currency risk (continued)

The following table sets out the foreign currency risk concentrations of the Fund.

2020 RM

Hong Kong Dollar ("HKD") Investments at FVTPL 2,116,427

United States Dollar ("USD") Investments at FVTPL 19,532,006 Cash at bank 14,500 Amount due to brokers (1,047,386) 18,499,120 Singapore Dollar ("SGD") Investments at FVTPL 1,208,691

2019

Hong Kong Dollar ("HKD") Investments at FVTPL 1,107,736 Forward foreign currency contracts (6,289) Dividend receivables 6,453 1,107,900 United States Dollar ("USD") Investments at FVTPL 3,976,500 Forward foreign currency contracts (9,420) 3,967,080

The table below summarises the sensitivity of the Fund’s net asset value and profit after tax to changes in foreign exchange movements. The analysis is based on the assumption that the foreign exchange rate changes by 5%, with all other variables remaining constant. Any increase/decrease in foreign exchange rate will result in a corresponding decrease/increase in the net assets attributable to unitholders by approximately 5%. Disclosures below are shown in absolute terms, changes and impact could be positive or negative.

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17. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

(e) Currency risk (continued)

Change in Impact in foreign profit after

exchange rate tax / net % asset value RM 2020 HKD 105,821 +5/-5 (105,821)

USD 924,956 +5/-5 (924,956)

SGD 60,435 +5/-5 (60,435) 2019 HKD 55,395 +5/-5 (55,395)

USD 198,354 +5/-5 (198,354)

(f) Liquidity risk

Liquidity risk refers to the ease of liquidating an investment depending on the investment’s volume traded in the market. Generally, if the Fund holds many securities that are illiquid, or difficult to dispose of, the value of the Fund may be affected when it has to sell such securities at an unfavourable price. This in turn will depress the value of the Fund. This risk may be mitigated by avoiding securities or markets with poor liquidity.

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

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17. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

(f) Liquidity risk (continued)

Contractual cash flows (undiscounted)

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 - Unquoted fixed income securities 5,887,495 7,231,442 606,025 608,001 1,286,195 13,161,971 Cash at bank 5,065,614 - - - - - Total financial assets 10,953,109 7,231,442 606,025 608,001 1,286,195 13,161,971

Financial liabilities Amount due to Manager 65,785 - - - - - Amount due to Trustee 2,852 - - - - - Amount due to brokers 2,047,386 - - - - - Total financial liabilities 2,116,023 - - - - -

2019 Financial assets Investments - Unquoted fixed income securities 1,098,658 8,719,927 6,968,679 343,536 344,362 7,703,093 Dividend receivables 48,578 - - - - - Deposits with licensed financial institutions 1,400,115 - - - - - Cash at bank 600,546 - - - - -

Total financial assets 3,147,897 8,719,927 6,968,679 343,536 344,362 7,703,093

Financial liabilities Amount due to Manager 114,274 - - - - - Amount due to Trustee 2,217 - - - - - Total financial liabilities 116,491 - - - - -

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17. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

(g) Credit risk This refers to the creditworthiness of the issuers of fixed income securities and/or money market instruments and its expected ability to make timely payment of interest and/or principal. Default happens when the issuers are not able to make timely payments of interest and/or principal. Fixed income securities and/or money market instruments are subject to both actual and perceived measures of creditworthiness. The downgrading of a rated fixed income securities or adverse publicity and investor perception could decrease the value and liquidity of the fixed income securities and/or money market instruments, particularly in a thinly traded market.

Deposits that the Fund has placed with licensed financial institutions are also exposed to credit/default risk. If the financial institutions become insolvent, the Fund may suffer capital losses with regards to the capital invested and interest foregone, causing the performance of the Fund to be adversely affected. Placement of deposits with a licensed financial institution will also be made based on prudent selection by the Manager according to its analysis on credit worthiness of the financial institutions.

The following table sets out maximum exposure to credit risk and the credit risk concentrations of the Fund.

Unquoted fixed Cash and Derivative Other As a % of income cash assets financial net asset securities equivalents at FVTPL assets* Total value RM RM RM RM RM 2020 - AAA 3,726,685 - - - 3,726,685 7.38 - AA1 1,000,000 5,065,614 - - 6,065,614 12.00 - AA2 760,763 - 15,376 - 776,139 1.54 - AA3 2,993,235 - - - 2,993,235 5.92 - A1 10,426,425 - - - 10,426,425 20.64 - AA- IS 344,444 - - - 344,444 0.68 - AAA (S) 4,425,961 - - - 4,425,961 8.76 - NR* 1,062,203 - - - 1,062,203 2.10 24,739,716 5,065,614 15,376 - 29,820,706 59.02

2019 - AAA 3,633,887 - - - 3,633,887 9.55 - AA1 - 600,546 - - 600,546 1.58 - AA2 752,982 - - - 752,982 1.98 - AA3 1,888,043 - - - 1,888,043 4.96 - A1 8,137,236 1,400,115 - - 9,537,351 25.06 - AA- IS 3,063,232 - - - 3,063,232 8.05 - AAA (S) 4,310,041 - - - 4,310,041 11.32 - Others - - - 3,032,373 3,032,373 7.96 21,785,421 2,000,661 - 3,032,373 26,818,455 70.46

*Non-Rated 44

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17. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

(g) Credit risk (continued)

* Comprise amount due from brokers and dividend receivables.

The financial assets of the Fund are neither past due nor impaired.

(h) Interest rate risk

This Fund is also subject to interest rate risk. Interest rate is a general indicator that will have an impact on the management of the Fund. This risk refers to the effect of interest rate changes on the market value of a portfolio of fixed income securities. In the event of rising interest rates, prices of fixed income securities will generally decrease and vice versa. Meanwhile, fixed income securities with longer maturities and lower coupon/profit rates are more sensitive to interest rate changes.

The table below summarises the sensitivity of the Fund’s net asset value and profit after tax to movements in prices of unquoted fixed income securities held by the Fund as a result of movement in interest rate. The analysis is based on the assumptions that the interest rate increased and decreased by 1% with all other variables held constant.

Impact on profit after tax/ net asset value 2020 2019 RM RM % Change in interest rate +1% (247,397) (217,854) -1% 247,397 217,854

(i) Geographical risk

The Fund is also subject to geographical risk. The value of the assets of the Fund may also be affected by the economic and political climate, restriction on currency repatriation or other developments in the law or regulations of the countries in the Asia Pacific region excluding Japan in which the Fund may invest. Further, when investing in foreign markets, there are countries which may require prior approvals before investments can take place. For example, if and when the Fund invests in countries such as China, Taiwan, South Korea, India and Vietnam, such countries require the prior application or registration of an investment license or investor code before any investment can be made in these countries. As such, if investments in such countries are undertaken, there may be a risk that the registration or license may be revoked or is not renewed by the relevant authority and the Fund’s investment in these countries may be affected. The effect on the Fund’s investments will depend on the regulatory requirements of the respective countries. For example, if a foreign market requires the Fund to obtain an investment license which is subject to renewal and if such investment license is not renewed in a timely manner, this may result in the Fund’s investment account in that country being frozen by the regulator resulting in investment activities for the Fund in that country being suspended. To mitigate this, the Manager will monitor closely the adherence of investment regulatory requirements in such countries. 45

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17. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

(j) Income distribution risk

It should be noted that the distribution of income is not guaranteed. Circumstances preventing the distribution of income include, among others, unavailability of sufficient realised returns to enable income distribution as distribution of income may only be made from realised gains or realised income.

18. CAPITAL MANAGEMENT

The capital of the Fund can vary depending on the demand for redemptions and subscriptions to the Fund. The Fund’s units in issue at the end of the financial year are disclosed in Note 8(a).

No changes were made to the Fund’s objectives, policies or processes during the current financial year.

19. SUBSEQUENT EVENT

The COVID-19 pandemic has significantly disrupted many business operations around the world. For the Fund, the impact on business operations has not been a direct consequence of the COVID-19 outbreak, but a result of the measures taken by the Government of Malaysia to contain it. As the outbreak continues to evolve, it is challenging to predict the full extent and duration of its impact on business and the economy.

The management is currently assessing the potential business and financial impact, but fully expects that the Fund has sufficient capital and resilience to weather the impact of COVID-19 on its business.

# (F) CORPORATE INFORMATION

Manager UOB Asset Management (Malaysia) Berhad 199101009166 (219478-X)

Level 22, Vista Tower The Intermark 348, Jalan Tun Razak 50400 Kuala Lumpur

Tel: 03-2732 1181 Fax: 03-2164 8188

Website: www.uobam.com.my

Board of Directors Mr Wong Kim Choong Mr Thio Boon Kiat (alternate to Mr Wong Kim Choong) Mr Seow Lun Hoo Mr Seow Voon Ping (alternate to Mr Seow Lun Hoo) Mr Wong Yoke Leong Mr Lim Kheng Swee En Syed Naqiz Shahabuddin Bin Syed Abdul Jabbar Ms Lim Suet Ling (Executive Director & CEO)

Trustee Deutsche Trustees Malaysia Berhad 200701005591 (763590-H)

Auditor of the Fund Ernst & Young (AF0039)

Tax Agent of the Fund Ernst & Young Tax Consultants Sdn Bhd (179793-K)

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