RHB Asset Management Sdn Bhd (“The Manager”) and HSBC (Malaysia) Trustee Berhad (“The Trustee”)

RHB MALAYSIA DIVIDEND FUND

INTERIM REPORT 2019

For the financial period ended 30 September 2019

GENERAL INFORMATION ABOUT THE FUND

Name, Category and Type

Fund Name - RHB Malaysia Dividend Fund

Fund Category - Equity fund

Fund Type - Income and growth fund

Investment Objective, Policy and Strategy

Objective of the Fund

This Fund aims to provide investors with capital growth and recurring income^ in the medium to long term* through investments in securities of and securities relating to Malaysian companies which offer attractive yields and sustainable dividend payments.

Note: ^ The income is in the form of units. * “medium to long term” in this context refers to a period between 3 - 7 years.

Strategy

The Fund aims to achieve its objective through investments in companies that focus on shareholder value in the form of sustainable dividend returns or have the potential to offer dividend yields combined with the prospect for growth.

Its indicative asset allocation is as follows:-

70% to 98% of - Investments in equity and equity-related securities of Net Asset Value Malaysian companies which offer attractive yields# and sustainable dividend payments.

2% to 30% of - Investments in liquid assets, fixed income securities, Net Asset Value money market instruments and deposits with financial institutions.

# Note: This refers to Malaysian companies that have the potential to offer dividend yields combined with the prospect for growth.

Performance Benchmark

The performance of the Fund is benchmarked against the FTSE Bursa Malaysia Emas Index.

Permitted Investments

This Fund may invest in securities traded on the Bursa Malaysia or any other market considered as an eligible market, unlisted securities, collective investment schemes, structured products, liquid assets (including money market instruments and deposits with any financial institutions), participate in the lending of securities, and any other investments permitted by the Securities Commission Malaysia from time to time.

Distribution Policy

Consistent with the Fund’s objective to provide medium to long term* capital growth and recurring income, the Fund will distribute a substantial portion of its returns to the unit holders. Distributions, if any, will be declared annually and will be reinvested after deduction of taxation and expenses.

* Note: “medium to long term” in this context refers to a period between 3-7 years.

MANAGER’S REPORT

MARKET REVIEW

Equity markets end the month of March 2019 on a strong note. Global equity markets edged up 1.0% in March 2019 (year-to-date (“YTD”): 11.6%). The turnaround since the sharp correction in December 2018 has largely been driven by the capitulation of central banks, led by the United States (“US”) Federal Reserve (“Fed”), as they fretted over weak global growth. US rose 1.7%, while Europe (0.2%), Japan (-0.3%) and Australia (-0.1%) all stayed flat. Meanwhile, Brent Crude (3.6%) continued on its uptrend on the back of supply cuts by Organization of the Petroleum Exporting Countries (“OPEC”). Asia ex-Japan was up 1.6% in March 19 (YTD: 11.2%) primarily driven by China (2.4%) and India (9.1%). Association of Southeast Asian Nations (“ASEAN”) (-0.7%) underperformed, dragged down by Malaysia (-3.6%) and Thailand (-2.2%). Index heavyweight banks (-6.2%) lagged in Malaysia on concerns over a potential windfall tax, while an inconclusive election followed by a weak earnings season in Thailand dampened market sentiment.

The Kuala Lumpur Composite Index (“KLCI”) fell 3.8% month-on-month (“MoM”) (or 64 points) and 2.8% in first quarter of year 2019 to close at 1,643 points at the end of March 2019. We believe the decline in the market was driven by concerns over potential earnings risks for banks due to a possible overnight policy rate (“OPR”) rate cut and corporate earnings due to slower global growth prospects. This has resulted in net foreign outflow doubling from Ringgit Malaysia (“RM”) 0.8 billion in February 2019 to RM1.6 billion in March 2019. In March 2019, KLCI underperformed the Financial Times Stock Exchange (“FTSE”) Bursa Emas or the broader market, and small-cap sector. Instead, FTSE Bursa Malaysia (“FBM”) Small Cap index was up by 1.32% MoM.

FBMKLCI was the worst performing market among MIST (Malaysia, Indonesia, Singapore and Thailand) with a loss of 3.8%, underperforming its peers that registered -0.9% to +0.4% MoM returns in March 2019. Materials (led by Press Metal) outperformed on potential slowdown in aluminium supply growth. Telcos (led by Telekom) outperformed, on potential asset sale to unlock value. Industrials (led by IJM) outperformed on potential East Coast Rail Link revival. Underperformers were consumer discretionary (led by Genting Group), financials and utilities.

On domestic economy, February 2019 Consumer Prices Index (“CPI”) declined 0.4% year-on-year (“YoY”) while up 0.2% MoM. The rise in pump prices contributed the bulk of the rise in sequential inflation while other components remained benign. Malaysia Nikkei Purchasing Managers’ Index (“PMI”) deteriorated to 47.6 points in February 2019 versus 47.9 points in January 2019. As widely expected, Bank Negara Malaysia’s (“BNM”) Monetary Policy Committee (“MPC”) maintained the OPR at 3.25% for the seventh consecutive meeting. The decision was well anticipated by us and all analysts surveyed by Bloomberg.

Global markets climbed in April 2019, with the Morgan Stanley Capital International (“MSCI”) World rising 3.2% for the month and extending YTD returns to 15.2%. A sharp bounce in the Deutscher Aktienindex (“DAX”) (+7.1%) alongside yet another strong US performance saw the MSCI Developed Market (“DM”) gain 3.4%, well ahead of the 2.0% advance registered in Emerging Market (“EM”). Prior flexibility of central banks yielded signs of growth stabilisation/recovery. Global equity investor sentiment remained upbeat, signalling an embracing of risk, with the futures market anticipating a benign policy outlook. Asia ex-Japan added 1.8% in April 2019, taking YTD returns to 13.3%. China (2.2% in April 19, 20.3% YTD) extended its rally, almost completely recuperating its year 2018 losses, backed by the bottoming out of activity in response to prior policy easing. ASEAN (2.1%) outperformance was driven by Singapore (6.0%), while political uncertainty gripped Indonesia (0.6%) and Thailand (1.4%) as they await election results. The upswing in Singapore was underpinned by a rally in banking stocks, partly due to the first quarter of year 2019 earnings beat by The Development Bank of Singapore (“DBS”).

The KLCI was flat in April 2019, with KLCI underperforming Asia Pacific Ex Japan by almost 2.0%. Foreign investors net sold RM1.5 billion, adding to fourth month of year 2019 net sell of RM2.9 billion. 10year Malaysia Government Securities (“MGS”) rose 2 basis points (“bps”) MoM to 3.79%, while Malaysian Ringgit (“MYR”) depreciated 1.3% MoM on fears of likely Malaysia debt exclusion from FTSE Russell World Global Bond Index. Industrials outperformed on revival of the downsized East Coast Rail Line (“ECRL”) and Bandar Malaysia project; followed by consumer discretionary (Genting Berhad-led), and healthcare (Glove Manufacturers-led). Telecommunications underperformed (mainly Telekom-led), followed by Financials (mainly Public Bank-led). The surge in Brent Crude on supply concerns intensified following the US decision to end waivers on Iranian oil imports. Brent Crude climbed 9.0% intra-month, before softening 2.4% due to rising US stockpiles, to end the month 6.4% higher.

Again, as announcement on ECRL and Bandar Malaysia stimulated the good sentiment on industrial or construction stocks which in turn provided the FBM Small Cap index with a high return of 7.16% MoM.

March 2019 CPI rose 0.2% YoY and MoM, likely driven by higher energy-related costs, in particular transport prices which were up 2.6% MoM. Market expects headline CPI to turn up in the coming months, particularly if crude oil prices continue to trend higher. Nonetheless, headline inflation will likely remain historically low, averaging 0.9% YoY in year 2019. February 2019 trade slows, with bulk of the slowdown owed to weak non-electronics exports. Malaysia Nikkei PMI deteriorated to a three month low of 47.2 in March 2019. March 2019 vehicle sales grew 9.6% YoY, 37% quarter-on-quarter (“QoQ”) to 54,776 units. This brings third month of year 2019 vehicle sales to 143,064 units, +5.9% YoY.

World equity markets tumbled in the month of May 2019, down 6.2% due to re- escalation of US-China trade war tension. The consequent rise in near-term uncertainty caused the US yield curve (10-year minus 3-month) to invert again within the space of two months, leading the futures market to anticipate two rate cuts by year end. The risk-off sentiment caused EM declined by 7.5% in May 2019 to underperform DM (-6.1% in May 2019). Among the developed markets, US declined 6.5%, Europe -6.3%, and Japan -4.0%.

Similarly, Asia ex-Japan suffered from the global sell down (-8.9% in May 2019). China (-13.5% in May 2019) suffered from the cessation of trade talks with the US, as the imposition of additional tariffs and the ban of select tech firms threatened to derail the nascent growth recovery. Korea (-9.3%) and Taiwan (- 7.8%) were collateral damages given the high weightage of the tech sector in their benchmark indices as well as their high sensitivity to global trade. India (+0.1% in May 2018) ended flat after recovering intra-month losses, led by financials following the victory of the ruling Bharatiya Janata Party (“BJP”) in the general elections, ensuring policy continuity. ASEAN equity markets fare relatively better (-4.8% in May 2019), was dragged down by Singapore (-10.4%).

FBM KLCI went against the odds with a 0.5% monthly gain. This is mainly underpinned by the solid gains in the telecommunication sector. The news of the proposed mega merger between Axiata and DiGi has significantly re-rated both heavyweights by 18% and 8%, respectively, in May 2019. Maxis also gained 3.4% due to the positive sentiment for the telecommunication sector. Meanwhile, the positive performance of blue chips such as Tenaga also helped to support the KLCI index during May 2019.

Risk off mode prevail and profit taking started to kick in on the FBM Small cap index, the index washed out all the gain in April and was down by 7.89% MoM in May 2019.

Global equity markets made a strong comeback advancing 6.4% during the month of June 2019 and extending YTD returns to 14.9%. US Dollar (“USD”) weakened as market participants price in three rate cuts by the Fed in year 2019, starting in July 2019. A basket of EM currencies gained 2.0% against the USD in June 2019, with the Pakistan Rupee being the only EM currency to depreciate (-7.5%). Asia ex-Japan equities inched up 6.1% in June 2019 (YTD: 9.4%) driven by strong recovery in China (7.3% in June 2019). Tele conversation between President Xi and President Trump raised expectations of a phasedown in the US-China trade tensions, coupled with some consumption stimulus. Korea (8.5%) and Taiwan (4.2%) partially recuperated their losses from the prior month, with the former being driven by the strong gains in the tech hardware sector (13.6%). ASEAN registered positive return of 6.8% was driven by Singapore (10.3%) and Thailand (9.6%). Singapore reflected firmer banking stock prices while foreign equity inflows propelled Thailand on the back of receding political noise.

The KLCI rose 1.3% MoM (or 21.4 points (“pts”)) but fell 1.1% in first half of year 2019 to close at 1,672 pts at the end of June 2019. The market rebound was driven by optimism over potential rate cuts in the US and easing US-China trade tensions. In June 2019, KLCI underperformed the FTSE Bursa Emas or the broader market, and small-cap sector. It also underperformed the MSCI Asia Pacific ex-Japan Index (“MXASJ”).

FBM Small cap index increased by 3.58% MoM with improved market sentiment.

On the economic front, Malaysia registered a 3.1% YoY increase in approved investments in first quarter of year 2019 on the back of robust manufacturing sector, in which 54.4% of RM53.9 billion were foreign investments. Malaysia Nikkei PMI fell to 48.8 in May 2019 vs. the seven-month high of 49.4 in April 2019.

There were slew of corporate news in the month of June 2019. Gamuda has received takeover offers from the government for all of its highway concessions for RM2.36 billion which the market believe is a fair price. Meanwhile, Malaysian Aviation Commission (“Mavcom”) has released its Second Consultation Paper, proposing a weighted average cost of capital (“WACC”) of 10.88% while Malaysia Airports Holdings Berhad (“MAHB”) is seeking 12.7%. Aabar Investments has ceased to a substantial shareholder of RHB Bank after disposing around 231 million shares to institutional investors. The Domestic Trade and Consumer Affairs Minister has intervened to prevent a 40%-50% hike in cement price hike, citing cement is a controlled item.

Global equity markets stayed flat in July 2019, up marginally by 0.2%. Asia ex- Japan slid 2.2% in July 2019, dragging YTD returns to 7.0%. Growth headwinds continue to persist in China (-0.9%), prompting calls for a lot more robust domestic monetary reflation than the modest improvement seen in second quarter of year 2019. India was one of the worst performing market (-5.5%) wiped out bulk of its YTD gains as foreign investors sold following a disappointing budget that was devoid of any meaningful stimulus to address slackening growth, but instead spelled out higher taxes. Korea (-6.2%) suffered from the deepening rift with Japan over the issue of forced wartime labour compensations that has hence grown into a trade conflict with the implementation of export restrictions of key products by Japan. The Bank of Korea cut rates by 25bps to cushion the adverse impacts on the export-oriented economy. Taiwan was up 1.6% reflected the rise in foundries, while Indonesia (1.3%) helped ASEAN (-1.2%) to relatively outperform the region on the back of a 25bps rate cut by Bank Indonesia.

KLCI retracted -2.23% in July 2019 to 1,635 pts. Petronas names Petronas Chemical (-10.8%), Petronas Dagangan (-7.5%) and Petronas Gas (-7.4%) led the decline, while Genting Malaysia (+19.4%) and Dialog (+5.8%) were the top performers on positive newsflow and oil prices. On a YTD basis, KLCI declined - 3.30%, led by Hartalega, Petronas Chemical, Top Glove (macro/industry issues) while top gainers were Genting Malaysia, Axiata, Genting Berhad, Digi (newsflow-driven).

BNM has maintained the OPR rate at 3% following the MPC meeting and said that the monetary policy remains accommodative. In fifth month of year 2019, the government has reduced its fiscal deficit by 39% YoY to RM21.4 billion, on track to achieve fiscal deficit target of 3.4% of gross domestic products (“GDP”) in year 2019. Malaysia Nikkei PMI fell to 47.8 in June 2019 vs. 48.8 in May 2019. Meanwhile, the Industrial Production Index (“IPI”) increased 4% YoY in May 2019, above consensus' expectation of 3.5%. June 2019 CPI rose to a 13-month high of 1.5% YoY (versus May 2019’s 0.2%) on the back of a low base effect due to the removal of goods and services tax (“GST”) in June last year.

On the corporate front, Genting Malaysia Berhad (“GENM”)’s outdoor theme park is back on track after GENM entered into a settlement agreement with Disney and Fox. RHB has received approval from BNM to commence negotiations for the disposal of its 94.7% stake in RHB Insurance to Tokio Marine. Tenaga announced that it is undergoing internal restructuring and plans to place its domestic power generation and electricity retail businesses into two new wholly owned subsidiaries ahead of the electricity reforms.

Global equities receded 2.6% in August 2019 but YTD returns is still commendable, up 12.1%. The inversion of the 2year-10year US Treasury (“UST”) yield curve and another round of escalation in the US-China trade war caused panic selling among investors. Investors were worried over coming recession and start to take refuge in safe havens, sending precious metals higher (Gold: 7.5%, Silver: 13.0%, Platinum: 8.0%). Asia Ex-Japan slid 4.6% in August 2019, curtailing YTD returns to 2.1% only. China (-4.3%) was dragged down by the worst monthly depreciation of the Yuan (-3.8%) since January 1994, that led the US to label the former a "currency manipulator". Hong Kong (-8.6%) was roiled by the ongoing protests, evoking concerns of a recession and prolong economic slowdown. Dwindling exports, worsening relations with Japan, and a weak second quarter of year 2019 earnings season spelled further downside for Korean equities (-5.0%). ASEAN fell 4.5% in August 2019, despite 25bps rate cuts in Thailand (- 3.0%) while Indonesia (-3.7%) and the Philippines were down 3.7% and 3.5% respectively.

The KLCI declined 1.4% MoM to end at 1,612 pts in August 2019. August 2019 recorded the highest net equity outflow of RM2.6 billion for the year, bringing eighth month of year 2019 net outflows to RM7.3 billion. Exporters like rubber gloves (Top Glove and Hartalega) and Plantations (Sime Darby Plantations) outperformed on the back of the weaker MYR, which led to outperformance of the Healthcare/Consumer Staples sector. Meanwhile, the Genting group of companies underperformed due to the acquisition of cash-strapped US casino operator Empire Resorts.

Malaysia’s GDP growth expanded 4.9% YoY in second quarter of year 2019, marginally above market expectations of 4.7% YoY. The strong pick-up in the economy is generally driven by continuous strong private consumption and recovery in commodity-based sectors. From expenditure side, private consumption and net exports contributed by 4.4% and 1.4% respectively. Meanwhile, July 2019’s vehicle sales fell 26% YoY to 50,853 units due to absence of a three-month tax holiday period. However, overall sales of new vehicles rose 20% MoM to 8,327 in July 2019 due to longer working month.

On the corporate front, Gamuda and Ministry of Finance have extended the conclusion date for negotiations for toll concessions sale from 30 August 2019 to 31 October 2019. Several proposals on proposed toll concessions acquisition have been submitted to the government, which include Khazanah’s proposed takeover of PLUS Expressways.

Equity markets performed better in September 2019 compared to August 2019. World equities was up 1.9% in September 2019 and 14.3% YTD. Oil market stole the limelight during the month with brent crude spiked 14.2% on 16 September after a drone attack shut down about 5.7 million barrels per day (“b/d”) of crude production in Saudi Arabia in the single biggest supply disruption ever, but softened subsequently as output was restored and the global growth slowdown weighed in. Asia ex-Japan rebounded 1.4% in September 2019 (YTD: 3.5%), driven by Korea (6.9%), Taiwan (4.0%) and India (3.1%). China market was flat in September 2019, as the deepening slowdown elicited only a limited response from policymakers. More aggressive policy easing is needed to restore confidence and induce a recovery in global and regional activity given China currently accounts for roughly one-third of global growth.

FBM KLCI retracted -1.75% in September 2019 to 1,584 pts. Telecommunication sector was dragged down after Axiata and Telenor merger were called off. Axiata (-14.9%) was the worst performing stock among the index stocks while Top Glove (-6.3%) and DIGI (-5.4%) were also among the top decliners. Petronas names reversed their fortunes, dominating the top gainers, led by Petronas Chemical (+8.8%), Malaysia International Shipping Corporation Berhad (“MISC”) (+7.4%) and Petronas Dagangan (+3.8%). On a YTD basis, KLCI declined 6.31% led by Hong Leong Bank and Top Glove, while top gainers were MISC, RHB & AXIATA (newsflow/earnings-driven).

The banking industry’s loan growth was unchanged at +3.9% YoY in August 2019, if compared to the +3.9% YoY rate in July 2019. This is still behind the loan growth expectations of around 5%. Households’ loan growth were marginally flattish while business loan saw some uptick.

ECONOMIC OUTLOOK

On the local economic front, Malaysia’s CPI for August 2019 released at a slightly higher figure of +1.5% YoY compared with prior month’s reading of 1.4% YoY but was in line with consensus expectation. The transport index fell 2.1% as lower RON97 petrol prices deepened the decline in fuel and lubricants sub-index. Despite higher oil prices recently due to the supply shock in Saudi Arabia from the drone attack, average RON97 petrol price from 1 September 2019 to 27 September 2019 remained lower compared to a year ago. Accordingly, economists expect inflation to inch up gradually towards year-end as the favourable low base effects should fully fade by September 2019. Forecasted year 2019 inflation to be around 1.0% to 1.4% is in line with BNM projection of 0.7% to 1.7%. The downside risk to the forecasted inflation number is if the targeted fuel subsidy (with price caps on RON95 lifted concurrently) could be delayed. In the scenario where the RON95 prices remain to be capped at RM2.08/liter through year 2019, full year inflation could instead come in closer to 0.8% to 1.0% accordingly.

In other economic data, the Producer Price Index (“PPI”), a key barometer of corporate profitability, dropped 1.9% in August 2019 bringing the average first eight months of year 2019 to around -1.9% YoY. The latest data reflects a deflationary environment for eight consecutive months. Price pressures are weak overall even with pockets of strength from finished goods. Details showed that factory gate prices remained weak in the manufacturing, mining and agricultural sectors. Manufacturing price fell by 1.0% in August 2019 and in deflationary for 20 straight months. Meanwhile both mining and agriculture prices fell 10.9% and 0.9% respectively. At this point, the key risk according to some economists is not inflation, but more to dis-inflation. Hence, it allows room for BNM to ease its monetary policy in a move to support growth.

PERFORMANCE REVIEW

For the half year period under review, the RHB Malaysia Dividend Fund registered a negative return of 0.43%* against its benchmark return of negative 3.03%*.

The outperformance was due to stock and sector selection. The Fund underweighting the financial sector which dragged the performance of the index while the illiquid holdings of the Fund were also affecting the return of the Fund.

The investment strategy and policy employed during the period under review were in line with the investment strategy and policy as stated in the prospectus. The Fund does not able to meet the objective despite outperformed the benchmark as overall benchmark return is in negative.

* Source: Lipper Investment Management (“Lipper IM”), 3 October 2019

EQUITY MARKET OUTLOOK AND STRATEGY

We believe we may be finally closing in on a bottom after several quarters of earnings downgrades. An expected sequential earnings recovery albeit mild in the second half of year 2019 should serve to lift the FBMKLCI in a seasonally strong quarter. We expect earnings growth next year will be stronger on the back of modest commodity price recovery, a pick-up in loan demand post NIM compression at the banks and potentially, a resolution on the US-China trade war. However, anxieties over earnings disappointments, the continuous reduction in Malaysia’s weight in major global bond and equity indices and falling interest rates globally, will likely see defensive yield seeking to be the dominant investment style in the near term.

While overall sectors remains challenging due to external uncertainties, we are inclined to maintain our view that valuation is compelling in particular among big cap stocks with high dividend yield. The upcoming Budget year 2020 to be tabled on 11 October 2019 will be closely watched for the likelihood of some fiscal flexibility in favour of growth support, amidst domestic and global growth weakness. The new government has indicated that economic growth will be prioritized alongside fiscal responsibility, hence, in our view, we are unlikely to see large-scale pump priming. The budget is likely to take on a shared prosperity approach for sustainable and inclusive growth. Infrastructure project rollout, measures to stimulate private sector investments, home ownership, and sin taxes (absence) are what investors will be closely monitoring.

PERFORMANCE DATA

Annual Total Returns 31.03.2019- Financial Year Ended 31 March 30.09.2019 2019 2018 2017 2016 2015 % % % % % % RHB Malaysia Dividend Fund - Capital Return (0.43) (15.73) (22.41) (6.25) (6.95) 1.46 - Income Return - - 6.51 4.92 10.76 - - Total Returns (0.43) (15.73) (17.36) (1.64) 3.06 1.46

FTSE Bursa Malaysia EMAS Index (3.03) (11.43) 5.53 3.70 (5.10) (1.83)

Average Annual Returns 1 Year 3 Years 5 Years 10 Years 30.09.2018- 30.09.2016- 30.09.2014- 30.09.2009- 30.09.2019 30.09.2019 30.09.2019 30.09.2019 % % % % RHB Malaysia Dividend Fund (9.81) (9.80) (7.15) 2.64

FTSE Bursa Malaysia EMAS Index (10.61) (1.40) (2.82) 3.30

Performance of RHB Malaysia Dividend Fund for the period from 30 September 2009 to 30 September 2019 Cumulative Return Over The Period (%)

Source: Lipper IM, 3 October 2019

The abovementioned performance figures are indicative returns based on daily Net Asset Value of a unit (as per Lipper Database) since inception.

The calculation of the above returns is based on computation methods of Lipper.

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

The abovementioned performance computations have been adjusted to reflect distribution payments and unit splits wherever applicable.

As At As At 31 March Fund Size 30.09.2019 2019 2018 2017 Net Asset Value (RM million) 17.02 22.40 29.47* 45.19* Units In Circulation (million) 91.64 120.09 133.22 158.41 Net Asset Value Per Unit (RM) 0.1857 0.1865 0.2213* 0.2852*

01.04.2019- Financial Year Ended 31 March Historical Data 30.09.2019 2019 2018 2017 Unit Prices NAV - Highest (RM) 0.1944 0.2196 0.2982* 0.3142* - Lowest (RM) 0.1830 0.1860 0.2202* 0.2683*

Distribution and Unit Split Gross Distribution Per Unit (sen) - - 1.4500 1.4000 Net Distribution Per Unit (sen) - - 1.4500 1.4000 Distribution date - - 22.03.2018 22.03.2017 NAV before distribution (cum) - - 0.2384 0.2993 NAV after distribution (ex) - - 0.2229 0.2847

Unit Split - - - -

Others Management Expense Ratio (MER) (%) # 0.83 1.65 1.71 1.71 Portfolio Turnover Ratio (PTR) (times) ## 0.31 0.71 0.63 0.39

* The figures quoted are ex-distribution

# The MER for the financial period was higher compared with the previous financial period due to lower expenses incurred for the financial period under review (refer to Note 11).

## The PTR for the financial period was lower compared with the previous financial period due to lesser investments activities for the financial period under review (refer to Note 12).

DISTRIBUTION

For the financial period under review, no distribution has been proposed by the Funds.

PORTFOLIO STRUCTURE

The asset allocations of the Fund as at reporting date were as follows:

As at 30 September As at 31 March 2019 2019 2018 2017 Sectors % % % % Equities Construction 3.27 3.62 0.98 - Consumer Products 8.49 9.08 11.41 28.34 Energy 4.10 2.50 - - Finance 18.01 23.72 19.64 2.97 Health Care 4.69 3.52 - - Industrial Products 16.92 18.39 18.26 24.24 Infrastructure Project Company - - 1.91 4.09 Plantation 1.72 - - - Properties 2.55 1.27 0.96 - Technology 0.69 - 1.40 - Telecommunications 5.17 7.30 - - Trading/Services - - 24.70 33.87 Transportation & Logistics 5.69 3.78 - - TSR & Warrants 0.05 0.04 0.02 0.44 Utilities 9.26 10.07 - - 80.61 83.29 79.28 93.95 Collective Investment Schemes 7.72 4.66 1.10 - Liquid assets and other net current assets 11.67 12.05 19.62 6.05 100.00 100.00 100.00 100.00

The asset allocation was reflective of the manager’s stance to risk manage its portfolio in an environment of volatile markets.

BREAKDOWN OF UNIT HOLDINGS BY SIZE

Account Holders No. Of Units Held* Size of Holdings No. % (‘000) % 5,000 and below 77 5.75 240 0.26 5,001 to 10,000 194 14.49 1,469 1.60 10,001 to 50,000 726 54.22 18,422 20.11 50,001 to 500,000 325 24.27 40,118 43.78 500,001 and above 17 1.27 31,384 34.25 Total 1,339 100.00 91,633 100.00

* Excluding Manager’s stock

SOFT COMMISSION

The Fund Manager may only receive soft commission in the form of research and advisory services that assist in the decision-making process relating to the Fund’s investments.

During the financial period under review, the soft commission received from the brokers had been retained by the Manager as the goods and services provided are of demonstrable benefit to the unitholders.

RHB MALAYSIA DIVIDEND FUND UNAUDITED STATEMENT OF FINANCIAL POSITION AS AT 30 SEPTEMBER 2019

Note 30.09.2019 31.03.2019 RM RM ASSETS Investments 5 15,031,089 19,696,196 Deposits with licensed financial institutions 6 1,865,725 2,661,706 Bank balances 6 48,304 7,473 Amount due from stockbrokers 25,365 - Amount due from Manager - 373 Dividend receivables 96,956 87,389 TOTAL ASSETS 17,067,439 22,453,137

LIABILITIES Amount due to stockbrokers 2,200 2,200 Amount due to Manager 12,665 11,557 Accrued management fee 21,024 29,101 Amount due to Trustee 841 1,164 Other payables and accruals 13,356 14,088 TOTAL LIABILITIES 50,086 58,110

NET ASSET VALUE 17,017,353 22,395,027

EQUITY Unitholders’ capital 25,090,617 30,516,865 Accumulated losses (8,073,264) (8,121,838) 17,017,353 22,395,027

UNITS IN CIRCULATION (UNITS) 7 91,638,297 120,088,297

NET ASSET VALUE PER UNIT (RM) 0.1857 0.1865

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

RHB MALAYSIA DIVIDEND FUND UNAUDITED STATEMENT OF INCOME AND EXPENSES FOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2019

01.04.2019- 01.04.2018- Note 30.09.2019 30.09.2018 RM RM INCOME/(LOSS) Dividend income 354,262 479,382 Interest income from deposits with a licensed financial institution 37,879 64,834 Net loss on investments 5 (140,428) (2,316,087) 251,713 (1,771,871) EXPENSES Management fee 8 (147,767) (206,470) Trustee’s fee 9 (5,911) (8,259) Audit fee (3,228) (3,184) Tax agent’s fee (1,524) (1,504) Transaction costs (35,869) (81,670) Other expenses (5,283) (9,730) (199,582) (310,817)

Net income/(loss) before taxation 52,131 (2,082,688) Taxation 10 (3,557) - Net income/(loss) after taxation 48,574 (2,082,688)

Net income/(loss) after taxation is made up of the following: Realised amount (2,265,550) (2,190,892) Unrealised amount 2,314,124 108,204 48,574 (2,082,688)

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

RHB MALAYSIA DIVIDEND FUND UNAUDITED STATEMENT OF CHANGES IN NET ASSET VALUE FOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2019

Unitholders’ Accumulated Total net capital losses asset value RM RM RM Balance as at 1 April 2018 33,091,842 (3,617,191) 29,474,651 Movement in net asset value: Net loss after taxation - (2,082,688) (2,082,688) Creation of units arising from applications 4,913,856 - 4,913,856 Cancellation of units (6,003,598) - (6,003,598) Balance as at 30 September 2018 32,002,100 (5,699,879) 26,302,221

Balance as at 1 April 2019 30,516,865 (8,121,838) 22,395,027 Movement in net asset value: Net income after taxation - 48,574 48,574 Creation of units arising from applications 164,662 - 164,662 Cancellation of units (5,590,910) - (5,590,910) Balance as at 30 September 2019 25,090,617 (8,073,264) 17,017,353

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

RHB MALAYSIA DIVIDEND FUND UNAUDITED STATEMENT OF CASH FLOWS FOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2019

01.04.2019- 01.04.2018- 30.09.2019 30.09.2018 RM RM CASH FLOWS FROM OPERATING ACTIVITIES Proceeds from sale of investments 7,024,166 11,579,126 Purchase of investments (2,560,721) (12,275,715) Dividends received 344,695 363,401 Interest received from deposits with licensed financial institutions 37,879 64,834 Management fee paid (155,844) (214,763) Trustee’s fee paid (6,234) (8,591) Payment for other expenses (14,324) (22,036) Net cash generated from/(used in) operating activities 4,669,617 (513,744)

CASH FLOWS FROM FINANCING ACTIVITIES Cash proceeds from units created 165,035 4,917,076 Cash paid for units cancelled (5,589,802) (5,982,558) Net cash used in financing activities (5,424,767) (1,065,482)

Net decrease in cash and cash equivalents (755,150) (1,579,226) Cash and cash equivalents at the beginning of the financial period 2,669,179 5,181,664 Cash and cash equivalents at the end of the financial period 1,914,029 3,602,438

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

RHB MALAYSIA DIVIDEND FUND NOTES TO THE UNAUDITED FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2019

1 THE FUND, THE MANAGER AND THEIR PRINCIPAL ACTIVITIES

RHB Malaysia Dividend Fund (hereinafter referred to as “the Fund”) was constituted pursuant to the execution of a Deed dated 22 November 2007 as amended via its First Supplemental Deed dated 4 September 2013, Second Supplemental Deed dated 16 February 2015 and Third Supplemental Deed dated 25 May 2015 (hereinafter referred to as “the Deeds”) between RHB Asset Management Sdn Bhd (“the Manager”) and HSBC (Malaysia) Trustee Berhad (“the Trustee”).

The Fund was launched on 4 March 2008 and will continue its operations until terminated according to the conditions provided in the Deeds.

The principal activity of the Fund is to invest in Permitted Investments as set out in the Deeds. All investments will be subject to the Securities Commission Malaysia’s (“SC”) Guidelines on Unit Trust Funds, SC requirements, the Deed, except where exemptions or variations have been approved by the SC, internal policies and procedures and objective of the Fund.

The main objective of the Fund is to provide investors with capital growth and recurring income in the medium to long term through investments in securities of and securities relating to Malaysian companies which offer attractive yields and sustainable dividend payments.

The Manager is a company incorporated in Malaysia and is a wholly-owned subsidiary of RHB Investment Bank Berhad, effective 6 January 2003. Its principal activities include rendering of investment management services, management of unit trust funds and private retirement schemes and provision of investment advisory services.

These financial statements were authorised for issue by the Manager on 21 November 2019.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation of the financial statements

The financial statements have been prepared under the historical cost convention, as modified by financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss, except as disclosed in the summary of significant accounting policies, and in accordance with Malaysian Financial Reporting Standards (“MFRS”) and International Financial Reporting Standards (“IFRS”).

The preparation of financial statements in conformity with MFRS and IFRS requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. It also requires the Manager to exercise judgement in the process of applying the Fund’s accounting policies. Although these estimates and judgement are based on the Manager’s best knowledge of current events and actions, actual results may differ.

(a) The Fund has applied the following standard and interpretation to the existing standard for the first time for the financial period beginning on 1 April 2019:

 IC Interpretation 23 ‘Uncertainty over Income Tax Treatments’ (effective 1 January 2019) provides guidance on how to recognise and measure deferred and current income tax assets and liabilities where there is uncertainty over a tax treatment.

If an entity concludes that it is not probable that the tax treatment will be accepted by the tax authority, the effect of the tax uncertainty should be included in the period when such determination is made. An entity shall measure the effect of uncertainty using the method which best predicts the resolution of the uncertainty.

IC Interpretation 23 will be applied retrospectively.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.1 Basis of preparation of the financial statements (continued)

(a) The Fund has applied the following standard and interpretation to the existing standard for the first time for the financial period beginning on 1 April 2019: (continued)

 Annual Improvements to MFRSs 2015 – 2017 Cycle: Amendments to MFRS 112 ‘Income Taxes’ (effective from 1 January 2019) clarify that where income tax consequences of dividends on financial instruments classified as equity is recognised (either in profit or loss, other comprehensive income or equity) depends on where the past transactions that generated distributable profits were recognised. Accordingly, the tax consequences are recognised in profit or loss when an entity determines payments on such instruments are distribution of profits (that is, dividends). Tax on dividend should not be recognised in equity merely on the basis that it is related to a distribution to owners.

The adoption of the amendments to published standard and interpretation to existing standard is not expected to give rise to any material impact on the financial statements of the Fund.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.2 Financial assets

Classification

The Fund classifies its financial assets in the following measurement categories:

 those to be measured subsequently at fair value through profit or loss, and  those to be measured at amortised cost

The Fund classifies its investments based on both the Fund’s business model for managing those financial assets and the contractual cash flow characteristics of the financial assets. The portfolio of financial assets is managed and performance is evaluated on a fair value basis. The Fund is primarily focused on fair value information and uses that information to assess the assets’ performance and to make decisions. The Fund has not taken the option to irrevocably designate any equity securities as fair value through other comprehensive income. The contractual cash flows of the Fund’s debt securities are solely principal and interest, however, these securities are neither held for the purpose of collecting contractual cash flows nor held both for collecting contractual cash flows and for sale. The collection of contractual cash flows is only incidental to achieving the Fund’s business model’s objective. Consequently, all investments are measured at fair value through profit or loss.

The Fund classifies cash and cash equivalents, amount due from stockbrokers, amount due from Manager and dividend receivables at amortised cost as these financial assets are held to collect contractual cash flows consisting of the amount outstanding.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.2 Financial assets (continued)

Recognition and measurement

Regular purchases and sales of financial assets are recognised on the trade date - the date on which the Fund commits to purchase or sell the asset. Financial assets and financial liabilities at fair value through profit or loss are initially recognised at fair value. Transaction costs are expensed as incurred in the statement of income and expenses.

Financial assets are de-recognised when the rights to receive cash flows from the investments have expired or the Fund has transferred substantially all risks and rewards of ownership.

Subsequent to initial recognition, all financial assets at fair value through profit or loss are measured at fair value. Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are presented in statement of income and expenses in the period in which they arise.

Dividend income from financial assets at fair value through profit or loss are recognised in the statement of income and expenses within dividend income from investments when the Fund’s right to receive payment is established.

Quoted investments and collective investment schemes are initially recognised at fair value and subsequently re-measured at fair value based on the market price quoted on the relevant stock exchanges at the close of the business on the valuation day, where the close price falls within the bid-ask spread. In circumstances where the close price is not within the bid-ask spread, the Manager will determine the point within the bid-ask spread that is most representative of the fair value.

If a valuation based on the market price does not represent the fair value of the securities, for example during abnormal market conditions or when no market price is available, including in the event of a suspension in the quotation of the securities for a period exceeding 14 days, or such shorter period as agreed by the Trustee, then the securities are valued as determined in good faith by the Manager, based on the methods or bases approved by the Trustee after appropriate technical consultation.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.2 Financial assets (continued)

Recognition and measurement (continued)

Deposits with licensed financial institutions are stated at cost plus accrued interest calculated on the effective interest method over the period from the date of placement to the date of the statement of financial position, which is a reasonable estimate of fair value due to the short-term nature of the deposits.

Financial assets at amortised cost are subsequently carried at amortised cost using the effective interest method.

Impairment of financial assets

The Fund measures credit risk and expected credit losses using probability of default, exposure at default and loss given default. Management considers both historical analysis and forward looking information in determining any expected credit loss. Management considers the probability of default to be close to zero as these instruments have a low risk of default and the counterparties have a strong capacity to meet their contractual obligations in the near term. As a result, no loss allowance has been recognised based on 12 month expected credit losses as any such impairment would be wholly insignificant to the Fund.

Significant increase in credit risk

A significant increase in credit risk is defined by management as any contractual payment which is more than 30 days past due or a counterparty credit rating which has fallen below BBB/Baa.

Definition of default and credit-impaired financial assets

Any contractual payment which is more than 90 days past due is considered credit impaired.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.2 Financial assets (continued)

Write-off

The Fund write off financial assets, in whole or in part, when it has exhausted all practical recovery efforts and has concluded there is no reasonable expectation of recovery. The assessment of no reasonable expectation of recovery is based on unavailability of debtor’s sources of income or assets to generate sufficient future cash flows to repay the amount. The Fund may write-off financial assets that are still subject to enforcement activity. Subsequent recoveries of amounts previously written off will result in impairment gains. There are no write-offs/recoveries during the financial period.

2.3 Financial liabilities

Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability.

Financial liabilities, within the scope of MFRS 9 are recognised in the statement of financial position when, and only when, the Fund becomes a party to the contractual provisions of the financial instrument.

The Fund’s financial liabilities which include amount due to stockbrokers, amount due to Manager, accrued management fee, amount due to Trustee and other payables and accruals are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.

A financial liability is de-recognised when the obligation under the liability is extinguished. Gains and losses are recognised in the statement of income and expenses when the liabilities are de-recognised, and through the amortisation process.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.4 Unitholders’ capital

The unitholders’ contributions to the Fund meet the criteria of the definition of puttable instruments to be classified as equity instruments under MFRS 132 “Financial Instruments: Presentation”. Those criteria include:

 the units entitle the holder to a proportionate share of the Fund’s net assets value;  the units are the most subordinated class and class features are identical;  there is no contractual obligations to deliver cash or another financial asset other than the obligation on the Fund to repurchase; and  the total expected cash flows from the units over its life are based substantially on the profit or loss of the Fund.

The outstanding units are carried at the redemption amount that is payable at each financial period if unitholder exercises the right to put the unit back to the Fund.

Units are created and cancelled at prices based on the Fund’s net asset value per unit at the time of creation or cancellation. The Fund’s net asset value per unit is calculated by dividing the net assets attributable to unitholders with the total number of outstanding units.

2.5 Income recognition

Dividend income from quoted investments and collective investment schemes are recognised when the Fund’s right to receive payment is established. Dividend income are received from financial assets measured at FVTPL.

Interest income from deposits with licensed financial institutions is recognised on an accrual basis using the effective interest method.

Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for financial assets that subsequently become credit-impaired. For credit-impaired financial assets the effective interest rate is applied to the net carrying amount of the financial assets (after deduction of the loss allowance).

Realised gain or loss on sale of quoted investments and collective investment schemes are arrived at after accounting for cost of investments, determined on the weighted average cost method.

Net income or loss is the total of income less expenses.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.6 Taxation

Current tax expense is determined according to Malaysian tax laws and includes all taxes based upon the taxable income earned during the financial period.

2.7 Cash and cash equivalents

For the purpose of the statement of cash flows, cash and cash equivalents comprise bank balances and deposits with a licensed financial institution which are subject to an insignificant risk of changes in value.

2.8 Amount due from/to stockbrokers

Amounts due from/to stockbrokers represent receivables for securities sold and payables for securities purchased that have been contracted for but not yet settled or delivered on the date of the statement of financial position respectively. The amount due from stockbrokers balance is held for collection.

These amounts are recognised initially at fair value and subsequently measured at amortised cost. At each reporting date, the Fund shall measure the loss allowance on amounts due from stockbrokers at an amount equal to the lifetime expected credit losses if the credit risk has increased significantly since initial recognition. If, at the reporting date, the credit risk has not increased significantly since initial recognition, the Fund shall measure the loss allowance at an amount equal to 12- month expected credit losses. Significant financial difficulties of the broker, probability that the broker will enter bankruptcy or financial reorganisation, and default in payments are all considered indicators that a loss allowance may be required.

2.9 Presentation and functional currency

Items included in 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 Ringgit Malaysia (“RM”), which is the Fund’s presentation and functional currency.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.10 Segmental information

Operating segments are reported in a manner consistent with the internal reporting used by the chief operating decision-maker. The operating results are regularly reviewed by the Manager and the Investment Committee. The Investment Committee assumes the role of chief operating decision maker, for performance assessment purposes and to make decisions about resources allocated to the investment segment based on the recommendation by the Investment & Security Selection Committee.

3. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Fund is exposed to a variety of risks, which include market risk, price risk, interest rate risk, credit risk, liquidity risk and capital 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.

Market risk

Securities may decline in value due to factors affecting securities markets generally or particular industries represented in the securities markets. The value of a security may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investors’ sentiment generally. They may also decline due to factors that affect a particular industry or industries, such as labour shortages or increased production costs and competitive conditions within an industry. Equity securities generally have greater price volatility than fixed income securities. The market price of securities owned by a unit trust fund might go down or up, sometimes rapidly or unpredictably.

3. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

Price risk

Price risk is the risk that the fair value of an investment of the Fund will fluctuate because of changes in market prices.

The Fund is exposed to quoted security price risk for it investments of RM15,031,089 (31.03.2019: RM19,696,196) in quoted investments and collective investment schemes.

The sensitivity analysis is based on the assumption that the price of the quoted investments and collective investment schemes fluctuate by +/(-) 5% with all other variables held constant, the impact on profit or loss and net asset value is +/(-) RM751,554 (31.03.2019: RM984,810).

Interest rate risk

Interest rate risk is the risk that the cost or the value of the financial instruments will fluctuate due to changes in market interest rates. The Fund’s exposure to the interest rate risk is mainly from short term placements with licensed financial institutions. The Manager overcomes the exposure by way of maintaining deposits on short term basis. Therefore, exposure to interest rate fluctuation is minimal.

3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

Credit risk

Credit risk refers to the possibility that the issuer of a particular investment will not be able to make timely or full payments of principal or income due on that investment. The credit risk arising from placements of deposits in licensed financial institutions is managed by ensuring that the Fund will only place deposits in reputable licensed financial institutions. The settlement terms of the proceeds from the creation of units receivable from the Manager are governed by the SC Guidelines on Unit Trust Funds.

The following table sets out the credit risk concentrations of the Fund:

Cash and Other financial cash equivalents assets* Total 30.09.2019 RM RM RM Financial institutions: AAA 1,914,029 - 1,914,029 Others - 122,321 122,321 1,914,029 122,321 2,036,350

31.03.2019 Financial institutions: AAA 2,669,179 - 2,669,179 Others - 87,762 87,762 2,669,179 87,762 2,756,941

* Comprise amount due from stockbrokers, amount due from Manager and dividend receivables.

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

3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

Liquidity risk

Liquidity risk is the risk that the Fund will encounter difficulty in meeting its financial obligations.

Liquidity risk exists when particular investments are difficult to sell, possibly preventing a unit trust fund from selling such illiquid securities at an advantageous time or price. Unit trust funds with principal investment strategies that involve securities or securities with substantial market and/or credit risk tend to have the greater exposure to liquidity risk. As part of its risk management, the Manager will attempt to manage the liquidity of the Fund through asset allocation and diversification strategies within the portfolio. The Manager will also conduct constant fundamental research and analysis to forecast future liquidity of its investments.

The table below summarises the Fund’s financial 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. Between Less than 1 month 1 month to 1 year RM RM 30.09.2019 Amount due to stockbrokers 2,200 - Amount due to Manager 12,665 - Accrued management fee 21,024 - Amount due to Trustee 841 - Other payables and accruals - 13,356 36,730 13,356

31.03.2019 Amount due to stockbrokers 2,200 - Amount due to Manager 11,557 - Accrued management fee 29,101 - Amount due to Trustee 1,164 - Other payables and accruals - 14,088 44,022 14,088

3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

Capital risk

The capital of the Fund is represented by equity consisting of unitholders’ capital of RM25,090,617 (31.03.2019: RM30,516,865) and accumulated losses of RM8,073,264 (31.03.2019: RM8,121,838). The amount of equity can change significantly on a daily basis as the Fund is subject to daily subscriptions and redemptions at the discretion of unitholders. The Fund’s objective when managing capital is to safeguard the Fund’s ability to continue as a going concern in order to provide returns for unitholders and benefits for other stakeholders and to maintain a strong capital base to support the development of the investment activities of the Fund.

4 FAIR VALUE ESTIMATION

Fair value is defined as 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 (i.e. an exit price).

The fair value of financial assets traded in active market (such as publicly traded derivatives and trading securities) are based on quoted market prices at the close of trading on the financial period end date.

An active market is a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

The fair value of financial assets that are not traded in an active market is determined by using valuation techniques. The Fund uses a variety of methods and makes assumptions that are based on market conditions existing at each period end date. Valuation techniques used for non-standardised financial instruments such as options, currency swaps and other over-the-counter derivatives, include the use of comparable transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, option pricing models and other valuation techniques commonly used by market participants making the maximum use of market inputs and relying as little as possible on entity-specific inputs.

The fair values are based on the following methodologies and assumptions:

(i) For bank balances and deposits with licensed financial institutions with maturities less than 1 year, the carrying value is a reasonable estimate of fair value.

(ii) The carrying value less impairment of receivables and payables are assumed to approximate their fair values due to their short term nature.

4 FAIR VALUE ESTIMATION (CONTINUED)

Fair value hierarchy

The Fund adopted MFRS 13 “Fair Value Measurement” in respect of disclosures about the degree of reliability of fair value measurement. This requires the Fund to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

 Level 1: Quoted prices (unadjusted) in active market for identical assets or liabilities  Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices)  Level 3: Inputs for the asset and liability that are not based on observable market data (that is, unobservable inputs)

The following table analyses within the fair value hierarchy the Fund’s financial assets at fair value through profit or loss (by class) measured at fair value:

Level 1 Level 2 Level 3 Total RM RM RM RM 30.09.2019 Investments: - Quoted investments 13,718,033 - - 13,718,033 - Collective Investment schemes 1,313,056 - - 1,313,056 Total 15,031,089 - - 15,031,089

31.03.2019 Investments: - Quoted investments 18,653,196 - - 18,653,196 - Collective Investment schemes 1,043,000 - - 1,043,000 Total 19,696,196 - - 19,696,196

Investments in active listed equities, i.e. quoted investments and collective investment schemes whose values are based on quoted market prices in active markets are classified within Level 1. The Fund does not adjust the quoted prices for these instruments. The Fund’s policies on valuation of these financial assets are stated in Note 2.2.

5 INVESTMENTS

30.09.2019 31.03.2019 RM RM Investments: - Quoted investments 13,718,033 18,653,196 - Collective Investment schemes 1,313,056 1,043,000 15,031,089 19,696,196

01.04.2019- 01.04.2018- 30.09.2019 30.09.2018 RM RM Net loss on investments comprised: - Net realised loss on disposal (2,454,552) (2,424,291) - Net unrealised gain on changes in fair value 2,314,124 108,204 (140,428) (2,316,087)

Investments as at 30 September 2019 are as follows:

% of net Name of Counter Quantity Cost Fair value asset value RM RM % QUOTED INVESTMENTS

Construction Gabungan AQRS Bhd 237,600 322,544 297,000 1.75 Gamuda Bhd 70,000 205,519 259,000 1.52 528,063 556,000 3.27

Consumer Products Bermaz Auto Bhd 105,200 259,087 239,856 1.41 DRB-Hicom Bhd 71,700 156,045 169,929 1.00 Genting Bhd 130,000 909,960 746,200 4.38 Kawan Food Bhd 180,000 438,784 219,600 1.29 Rhone Ma Holdings Bhd 100,030 110,478 70,021 0.41 1,874,354 1,445,606 8.49

Energy Dialog Group Bhd 205,000 590,723 697,000 4.10

Finance CIMB Group Holdings Bhd 119,672 808,038 601,950 3.54 Malayan Banking Bhd 144,500 1,480,335 1,229,695 7.23 Public Bank Bhd 61,400 1,355,061 1,232,912 7.24 3,643,434 3,064,557 18.01

5 INVESTMENTS (CONTINUED)

Investments as at 30 September 2019 are as follows: (continued)

% of net Name of Counter Quantity Cost Fair value asset value RM RM % QUOTED INVESTMENTS (CONTINUED)

Health Care Hartalega Holdings Bhd 65,000 401,890 341,250 2.01 Kossan Rubber Industries Bhd 106,700 472,479 456,676 2.68 874,369 797,926 4.69

Industrial Products Petronas Chemicals Group Bhd 92,200 773,376 695,188 4.09 Rohas Tecnic Bhd 619,600 891,574 343,878 2.02 SLP Resources Bhd 459,880 523,022 630,036 3.70 Sunway Bhd 215,450 332,001 370,574 2.18 Tex Cycle Technology (M) Bhd 1,529,800 1,243,210 558,377 3.28 Uchi Technologies Bhd 100,000 263,820 281,000 1.65 4,027,003 2,879,053 16.92

Plantation IOI Corporation Bhd 66,200 291,046 293,266 1.72

Properties Matrix Concepts Holdings Bhd 230,000 454,664 434,700 2.55

Technology Inari Amertron Bhd 64,800 103,213 117,936 0.69

Telecommunications Axiata Group Bhd 123,472 601,871 530,929 3.12 Digi.Com Bhd 73,400 341,831 348,650 2.05 943,702 879,579 5.17

5 INVESTMENTS (CONTINUED)

Investments as at 30 September 2019 are as follows: (continued)

% of net Name of Counter Quantity Cost Fair value asset value RM RM % QUOTED INVESTMENTS (CONTINUED)

Transportation & Logistics Malaysia Airports Holdings Bhd 35,300 310,887 305,345 1.80 MMC Corporation Bhd 430,000 469,916 455,800 2.68 Westports Holdings Bhd 50,000 167,400 206,500 1.21 948,203 967,645 5.69

TSR & Warrants Gabungan AQRS Bhd- Warrant 22,500 - 8,325 0.05

UTILITIES Petronas Gas Bhd 16,800 299,689 275,184 1.62 Tenaga Nasional Bhd 95,400 1,436,160 1,301,256 7.64 1,735,849 1,576,440 9.26

TOTAL QUOTED INVESTMENTS 16,014,623 13,718,033 80.61

COLLECTIVE INVESTMENT SCHEMES

Real Estate Investment Trusts Axis Real Estate Investment Trust 170,000 303,280 314,500 1.85 IGB Real Estate Investment Trust 300,000 455,600 612,000 3.60 Pavilion Real Estate Investment Trust 100,000 145,000 181,000 1.06 YTL Hospitality Real Estate Investment Trust 153,400 210,998 205,556 1.21

TOTAL COLLECTIVE INVESTMENT SCHEMES 1,114,878 1,313,056 7.72

TOTAL INVESTMENTS 17,129,501 15,031,089 88.33

5 INVESTMENTS (CONTINUED)

Investments as at 31 March 2019 are as follows:

% of net Name of Counter Quantity Cost Fair value asset value RM RM % QUOTED INVESTMENTS

Construction Gabungan AQRS Bhd 91,800 129,150 122,094 0.55 Gamuda Bhd 100,000 273,570 288,000 1.29 IJM Corp Bhd 180,000 328,888 399,600 1.78 731,608 809,694 3.62

Consumer Products DRB-Hicom Bhd 169,500 368,894 322,050 1.44 Genting Bhd 130,000 909,960 863,200 3.86 Kawan Food Bhd 221,333 539,542 371,839 1.66 Perak Transit Bhd 1,652,400 450,654 388,314 1.73 Rhone Ma Holdings Bhd 117,330 129,585 87,998 0.39 2,398,635 2,033,401 9.08

Energy Dialog Group Bhd 177,000 495,506 561,090 2.50

Finance Alliance Bank Malaysia Bhd 52,000 228,186 212,680 0.95 CIMB Group Holdings Bhd 203,929 1,385,858 1,050,234 4.69 Malayan Banking Bhd 224,000 2,294,775 2,076,480 9.27 Public Bank Bhd 85,200 1,880,313 1,973,232 8.81 5,789,132 5,312,626 23.72

5 INVESTMENTS (CONTINUED)

Investments as at 31 March 2019 are as follows: (continued)

% of net Name of Counter Quantity Cost Fair value asset value RM RM % QUOTED INVESTMENTS (CONTINUED)

Health Care Hartalega Holdings Bhd 53,000 338,655 245,390 1.10 Kossan Rubber Industries Bhd 90,000 403,662 316,800 1.41 KPJ Healthcare Berhad 230,000 249,389 225,400 1.01 991,706 787,590 3.52

Industrial Products Pestech International Bhd 298,900 441,021 304,878 1.36 Petronas Chemicals Group Bhd 70,000 613,487 641,200 2.86 P.I.E. Industrial Bhd 100,000 196,260 156,000 0.70 Rohas Tecnic Bhd 649,600 934,742 422,240 1.89 SLP Resources Bhd 489,880 557,141 597,653 2.67 Sunway Bhd 335,000 521,386 562,800 2.51 Tex Cycle Technology (M) Bhd 1,529,800 1,243,210 810,794 3.62 Uchi Technologies Bhd 100,000 263,820 267,000 1.19 United U-Li Corporation Bhd 838,700 2,406,287 356,448 1.59 7,177,354 4,119,013 18.39

Properties Matrix Concepts Holdings Bhd 150,000 300,000 283,500 1.27

Telecommunications Astro Malaysia Holdings Bhd 218,000 300,021 333,540 1.49 Axiata Group Berhad 204,172 995,248 847,314 3.78 Digi.Com Bhd 100,000 447,950 455,000 2.03 1,743,219 1,635,854 7.30

5 INVESTMENTS (CONTINUED)

Investments as at 31 March 2019 are as follows: (continued)

% of net Name of Counter Quantity Cost Fair value asset value RM RM % QUOTED INVESTMENTS (CONTINUED)

Transportation & Logistics Malaysia Airports Holdings Bhd 50,000 446,980 362,000 1.62 MMC Corporation Bhd 300,000 326,110 297,000 1.32 Westports Holdings Bhd 50,000 167,400 188,000 0.84 940,490 847,000 3.78

TSR & Warrants Gabungan AQRS Bhd- Warrant 22,500 - 8,100 0.04

UTILITIES Malakoff Corporation Bhd 300,000 295,180 273,000 1.22 Petronas Gas Bhd 16,800 299,689 296,016 1.32 Tenaga Nasional Bhd 133,200 2,042,333 1,686,312 7.53 2,637,202 2,255,328 10.07

TOTAL QUOTED INVESTMENTS 23,204,852 18,653,196 83.29

COLLECTIVE INVESTMENT SCHEMES

Real Estate Investment Trusts Axis Real Estate Investment Trust 170,000 303,280 306,000 1.37 IGB Real Estate Investment Trust 300,000 455,600 555,000 2.48 Pavilion Real Estate Investment Trust 100,000 145,000 182,000 0.81

TOTAL COLLECTIVE INVESTMENT SCHEMES 903,880 1,043,000 4.66

TOTAL INVESTMENTS 24,108,732 19,696,196 87.95

6 CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise:

30.09.2019 31.03.2019 RM RM

Deposits with licensed financial institutions 1,865,725 2,661,706 Bank balances 48,304 7,473 1,914,029 2,669,179

7 UNITS IN CIRCULATION

30.09.2019 31.03.2019 Units Units

At the beginning of the financial period/year 120,088,297 133,215,297 Creation of units arising from applications during the financial period/year 876,000 23,397,000 Cancellation of units during the financial period/year (29,326,000) (36,524,000) At the end of the financial period/year 91,638,297 120,088,297

8 MANAGEMENT FEE

In accordance with the Prospectus, the management fee provided in the financial statements is 1.50% (01.04.2018-30.09.2018: 1.50%) per annum based on the net asset value of the Fund, calculated on a daily basis for the financial period.

9 TRUSTEE’S FEE

In accordance with the Prospectus, the Trustee’s fee provided in the financial statements is 0.06% (01.04.2018-30.09.2018: 0.06%) per annum based on the net asset value of the Fund, calculated on a daily basis for the financial period.

10 TAXATION

(a) Tax charge for the financial period

01.04.2019- 01.04.2018- 30.09.2019 30.09.2018 RM RM

Current taxation- withholding tax 3,557 -

(b) Numerical reconciliation of income tax expense

The numerical reconciliation between the net income/(loss) before taxation multiplied by the Malaysian statutory income tax rate and the tax expense of the Fund is as follows:

01.04.2019- 01.04.2018- 30.09.2019 30.09.2018 RM RM

Net income/(loss) before taxation 52,131 (2,082,688)

Tax calculated at statutory income tax rate of 24% 12,511 (499,845) Tax effects of: - (Income not subject to tax)/loss not deductible for tax purposes (60,411) 425,249 - Expenses not deductible for tax purposes 11,582 23,078 - Restriction on tax deductible expenses for unit trust funds 36,318 51,518 - Withholding tax - REIT 3,557 - Tax expense 3,557 -

11 MANAGEMENT EXPENSE RATIO (“MER”)

01.04.2019- 01.04.2018- 30.09.2019 30.09.2018 % %

MER 0.83 0.82

The MER ratio is calculated based on total expenses excluding investment transaction related costs of the Fund to the average net asset value of the Fund calculated on a daily basis.

12 PORTFOLIO TURNOVER RATIO (“PTR”)

01.04.2019- 01.04.2018- 30.09.2019 30.09.2018

PTR (times) 0.31 0.47

The PTR ratio is calculated based on average of acquisition and disposals of the Fund for the financial period to the average net asset value of the Fund calculated on a daily basis.

13 UNITS HELD BY THE MANAGER AND PARTIES RELATED TO THE MANAGER

The number of units held by the Manager is as follows:

30.09.2019 31.03.2019 Units RM Units RM

The Manager 5,045 937 5,049 942

The units are held beneficially by the Manager for booking purposes. The Manager is of the opinion that all transactions with the related parties have been entered into in the normal course of business at agreed terms between the related parties.

Other than the above, there were no units held by Directors or parties related to the Manager.

The holding company and the ultimate holding company of the Manager is RHB Investment Bank Berhad and RHB Bank Berhad respectively. The Manager treats RHB Bank Berhad group of companies including RHB Investment Bank Berhad and its subsidiaries as related parties.

14 TRANSACTIONS BY THE FUND

Details of transactions by the Fund for the financial period ended 30 September 2019 are as follows:

Percentage Percentage of total Brokers/Financial Value of of total Brokerage brokerage institutions trades trades fees fees RM % RM %

RHB Investment Bank Bhd* 3,224,722 32.70 9,674 37.13 Macquarie Capital Securities Ltd 2,064,094 20.93 4,128 15.84 CIMB Securities Sdn Bhd 1,142,389 11.58 3,427 13.15 Maybank Investment Bank Bhd 954,748 9.68 2,864 10.99 CIMB Investment Bank Bhd 906,424 9.19 2,725 10.46 Alliance Investment Bank Bhd 496,062 5.03 992 3.81 Credit Suisse Securities (Malaysia) Sdn Bhd 406,559 4.12 813 3.12 TA Securities Holdings Bhd 267,922 2.72 581 2.23 Credit Suisse First Boston (Singpore) 214,406 2.17 429 1.65 CLSA Securities Malaysia Sdn Bhd 134,197 1.36 269 1.03 Others 50,976 0.52 153 0.59 9,862,499 100.00 26,055 100.00

14 TRANSACTIONS BY THE FUND

Details of transactions by the Fund for the financial year ended 31 March 2019 are as follows:

Percentage Percentage of total Brokers/Financial Value of of total Brokerage brokerage institutions trades trades fees fees RM % RM %

RHB Investment Bank Bhd* 14,273,292 44.17 42,934 48.33 CIMB Investment Bank Bhd 6,252,650 19.35 16,525 18.60 Maybank Investment Bank Bhd 5,273,361 16.32 15,848 17.84 Alliance Investment Bank Bhd 2,074,285 6.42 4,181 4.71 Affin Hwang Investment Bank Bhd 1,165,403 3.61 2,711 3.05 CLSA Singapore Pte Ltd 779,527 2.41 1,559 1.75 Kenanga Investment Bank Bhd 639,160 1.98 1,278 1.44 Macquarie Capital Securities Ltd 629,010 1.95 1,258 1.42 Hong Leong Investment Bank Bhd 586,950 1.82 1,174 1.32 MIDF Amanah Investment Bank Bhd 269,294 0.83 560 0.63 Others 369,272 1.14 806 0.91 32,312,204 100.00 88,834 100.00

* Included in transactions by the Fund are trades with RHB Investment Bank Bhd, the holding company of the Manager. The Manager is of the opinion that all transactions with the related company have been entered into in the normal course of business at agreed terms between the related party.

15 FINANCIAL INSTRUMENTS BY CATEGORIES

30.09.2019 31.03.2019 RM RM Financial assets Financial assets at fair value through profit or loss (‘FVTPL’) • Quoted investments 13,718,033 18,653,196 • Collective investment schemes 1,313,056 1,043,000 15,031,089 19,696,196

Financial assets at amortised cost • Deposits with licensed financial institutions 1,865,725 2,661,706 • Bank balances 48,304 7,473 • Amount due from stockbrokers 25,365 - • Amount due from Manager - 373 • Dividends receivable 96,956 87,389 2,036,350 2,756,941

Financial liabilities Financial liabilities at amortised cost • Amount due to stockbrokers 2,200 2,200 • Amount due to Manager 12,665 11,557 • Accrued management fee 21,024 29,101 • Amount due to Trustee 841 1,164 • Other payables and accruals 13,356 14,088 50,086 58,110

16 SEGMENT INFORMATION

The Investment & Security Selection Committee of the Manager recommends strategic resource allocations of the Fund to the Investment Committee of the Manager (collectively referred to as “Committee”).

The internal reporting provided to the Committee for the Fund’s assets, liabilities and performance is prepared on a consistent basis with the measurement and recognition principles of MFRS and IFRS. The Committee considers the business from both a geographic and investment perspective. Geographically, the Committee considers the performance of investment in overall basis.

The reportable operating segments derive their income by seeking investments to achieve investments objective commensurate with an acceptable level of risk within each portfolio. These returns consist of interest, dividends and gains on the appreciation in the value of investments are derived from Malaysia.

There were no changes in the reportable segments during the financial period.

STATEMENT BY MANAGER

We, Yap Chee Meng and Ong Yin Suen, two of the Directors of RHB Asset Management Sdn Bhd, do hereby state that in the opinion of the Directors of the Manager, the accompanying unaudited statement of financial position, unaudited statement of income and expenses, unaudited statement of changes in net asset value, unaudited statement of cash flows and the accompanying notes, are drawn up in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards so as to give a true and fair view of the financial position of the Fund as of 30 September 2019 and of its financial performance and cash flows for the financial period then ended and comply with provisions of the Deeds.

On behalf of the Manager

YAP CHEE MENG ONG YIN SUEN DIRECTOR DIRECTOR

21 November 2019

TRUSTEE’S REPORT TO THE UNITHOLDERS OF RHB MALAYSIA DIVIDEND FUND

We have acted as Trustee of RHB Malaysia Dividend Fund (“the Fund”) for the financial period ended 30 September 2019. To the best of our knowledge, RHB Asset Management Sdn Bhd (“the Management Company”), has operated and managed the Fund in accordance with the following: a) limitations imposed on the investment powers of the Management Company and the Trustee under the Deeds, the Securities Commission’s Guidelines on Unit Trust Funds, the Capital Markets and Services Act 2007 and other applicable laws; b) valuation/pricing is carried out in accordance with the Deeds and any regulatory requirements; and c) creation and cancellation of units are carried out in accordance with the Deeds and any regulatory requirements.

For HSBC (Malaysia) Trustee Bhd

Tan Bee Nie Manager, Investment Compliance Monitoring

Kuala Lumpur 21 November 2019

CORPORATE INFORMATION

MANAGER RHB Asset Management Sdn Bhd

REGISTERED OFFICE Level 10, Tower One, RHB Centre, Jalan Tun Razak, 50400 Kuala Lumpur

PRINCIPAL AND BUSINESS OFFICE Level 8, Tower Two & Three, RHB Centre, Jalan Tun Razak, 50400 Kuala Lumpur

Email address: [email protected] Tel: 03-9205 8000 Fax: 03-9205 8100 Website: www.rhbgroup.com

BOARD OF DIRECTORS Mr Yap Chee Meng (Independent Non-Executive Chairman) Mr Chin Yoong Kheong (Senior Independent Non-Executive Director) Dr. Ngo Get Ping (Independent Non-Executive Director) Puan Sharifatu Laila Syed Ali (Independent Non-Executive Director) Ms Ong Yin Suen (Managing Director/Chief Executive Officer)

INVESTMENT COMMITTEE MEMBERS Mr Yap Chee Meng (Independent Chairman) YBhg Dato’ Darawati Hussain Puan Sharifatu Laila Syed Ali

CHIEF EXECUTIVE OFFICER Ms Ong Yin Suen

SECRETARY Encik Azman Shah Md Yaman (LS No. 0006901)

BRANCH OFFICE Kuala Lumpur Office B-9-6, Megan Avenue 1 No. 189, Jalan Tun Razak 50400 Kuala Lumpur Tel: 03-2171 2755/ 03-2166 7011 Fax: 03-2770 0022

Sri Petaling Office Level 1 & 2, No 53 Jalan Radin Tengah Bandar Baru Seri Petaling 57000 Kuala Lumpur Tel: 03-9054 2470 Fax: 03-9054 0934

Batu Pahat Office 53, 53-A and 53-B Jalan Sultanah 83000 Batu Pahat, Johor Tel: 07-438 0271/ 07-438 0988 Fax: 07-438 0277

Ipoh Office No.7A, Persiaran Greentown 9, Pusat Perdagangan Greentown, 30450 Ipoh, Perak Tel: 05-242 4311 Fax: 05-242 4312

Johor Bahru Office No 34 Jalan Kebun Teh 1 Pusat Perdagangan Kebun Teh 80250 Johor Bahru, Johor Tel: 07-221 0129 Fax: 07-221 0291

2nd Floor, 21 & 23 Jalan Molek 1/30, Taman Molek 81100 Johor Bahru, Johor Tel: 07-358 3587 Fax: 07-358 3581

Kuantan Office B 32-34, 2nd Floor, Lorong Tun Ismail 8 Sri Dagangan II 25000 Kuantan, Pahang Tel: 09-517 3611 Fax: 09-517 3612

Kuching Office Lot 133, Section 20, Sublot 2 & 3, 1st Floor, Jalan Tun Ahmad Zaidi Adruce, 93200 Kuching, Sarawak Tel: 082-550 838 Fax: 082-550 508

Lot 172, Section 49, K.T.L.D, Jalan Chan Chin Ann, 93100 Kuching, Sarawak Tel: 082-245 611 Fax: 082-242 712

Kota Bharu Office Ground Floor, No 3486-G, Jalan Sultan Ibrahim, 15050 Kota Bharu, Kelantan Tel: 09-740 6891 Fax: 09-740 6890

Kota Kinabalu Office Lot No. C-02-04, 2nd Floor Block C, Warisan Square Jalan Tun Fuad Stephens 88000, Kota Kinabalu Sabah Tel: 088-528 686 Fax: 088-528 685

Melaka Office 581B, Taman Melaka Raya 75000 Melaka Tel: 06-284 4211/ 06-281 4110 Fax: 06-292 2212

Miri Office Lot 1268 & 1269, Second Floor Centre Point Commercial Centre Jalan Melayu 98000 Miri, Sarawak Tel: 085-422 788 Fax: 085-415 243

Penang Office 3rd Floor, 44 Lebuh Pantai 10300 Georgetown, Penang Tel: 04-264 5639 Fax: 04-264 5640

Prai Office First Floor, No. 1797-1-04, Kompleks Auto World, Jalan Perusahaan, Juru Interchange, 13600 Perai, Penang. Tel: 04-506 2116/ 04-506 0216 Fax: 04-505 9996

TRUSTEE HSBC (Malaysia) Trustee Berhad

BANKER RHB Bank Berhad

AUDITORS PricewaterhouseCoopers PLT

TAX ADVISER PricewaterhouseCoopers Taxation Services Sdn Bhd

DISTRIBUTORS Alliance Bank Malaysia Berhad Apex Investment Services Berhad Areca Capital Sdn Bhd CIMB Bank Berhad Hong Leong Bank Berhad iFast Capital Sdn Bhd Kenanga Investment Bank Berhad Malayan Banking Berhad Manulife Asset Management Services Berhad Phillip Mutual Berhad RHB Bank Berhad RHB Investment Bank Berhad United Overseas Bank (Malaysia) Berhad RHB Asset Management Unit Trust Consultants