eastspring investments growth fundeastspring investments growth fund for the six months financial...

EASTSPRING INVESTMENTSGROWTH FUND

FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 30 JUNE 2019

INTERIM REPORT

Eastspring Investments Berhad (531241-U)

Level 22, Menara Prudential, Persiaran TRX Barat55188 Tun Razak Exchange, Kuala LumpurT: (603) 2778 3888 F: (603) 2789 7220eastspring.com/my

Client ServicesT: (603) 2778 1000 [email protected]

Dear Valued Investor,

Greetings from Eastspring Investments Berhad!

First and foremost, we would like to take this opportunity to thank you for choosing to invest with Eastspring Investments Berhad.

We are pleased to enclose a copy of the Annual/Interim/Quarterly Fund Reports of Eastspring Investments Berhad’s fund(s) for the reporting period ended 30 June 2019.

You may also download these reports from our website at www.eastspring.com/my

Should you require any assistance, please do not hesitate to contact our Client Services at 03-2778 1000.

Yours sincerely,

Raymond Tang Chee Kin Non-Independent, Executive Director and Chief Executive Officer

TABLE OF CONTENTS

Fund Information 1

Key Performance Data 3

Manager’s Report 6

Market Review 9

Rebates and Soft Commissions 10

Statement by the Manager 12

Trustee’s Report to the Unit Holders of

Eastspring Investments Growth Fund 13

Unaudited Statement of Comprehensive Income 14

Unaudited Statement of Financial Position 15

Unaudited Statement of Changes in Equity 16

Unaudited Statement of Cash Flows 17

Summary of Significant Accounting Policies 18

Notes to the Unaudited Financial Statements 27

Corporate Directory 56

FUND INFORMATION

Name of Fund Eastspring Investments Growth Fund (the “Fund”)

Fund Category/ Type

Equity/growth

Fund Objective The Fund seeks to provide investors with long-term capital appreciation by investing principally* in larger companies** which will appreciate in value.

* principally refers to minimum 50% of the Fund’s NAV. ** larger companies generally refers to companies with market

capitalisation of RM2 billion or above at the point of acquisition.

ANY MATERIAL CHANGES TO THE FUND’S OBJECTIVE WOULD REQUIRE UNIT HOLDERS’ APPROVAL.

Performance Benchmark

The performance benchmark of the Fund is FTSE Bursa Malaysia 100 Index (“FBM100”).

Source: www.bursamalaysia.com

Note: The risk profile of the Fund is different from the risk profile of the performance benchmark.

Fund Income Distribution Policy

Incidental

1Client Services : 03-2778 1000

Interim Report

FUND INFORMATION (CONTINUED)

Breakdown of Unit Holdings by Size

As at 30 June 2019, the size of Eastspring Investments Growth Fund stood at 168.820 million units.

Fund Size

Breakdown of Unit Holdings

Unit Holdings

No. of Unit

Holders %

No of Units* (‘000) %

5,000 units and below 999 19.77 3,064 1.81

5,001 to 10,000 units 1,019 20.16 7,282 4.31

10,001 to 50,000 units 2,354 46.57 54,232 32.14

50,001 to 500,000 units 666 13.18 68,411 40.52

500,001 units and above 16 0.32 35,828 21.22

Total 5,054 100.00 168,817 100.00

* excludes units held by the Manager.

Jan2019

Feb2019

Mar2019

Apr2019

May2019

Jun2019

Un

its

(Mill

ion

)250

200

150

100

50

0

Client Services : 03-2778 10002

Eastspring Investments Growth Fund

Category 30.6.2019 30.6.2018 30.6.2017

(%) (%) (%)

Quoted securities

Construction - 4.99 4.83

Consumer - - 1.46

Consumer Products & Services/Consumer Product 16.94 - -

Energy 2.71 - -

Financial Services/Finance 28.57 29.45 1.94

Health Care 7.75 3.80 19.19

Industrial Products & Services/Industrial Product 4.55 8.20 3.14

Infrastructure Project Company - 2.39 -

Manufacturing - 0.92 1.54

Plantation 6.46 2.04 -

Property 0.98 9.96 12.46

REITS 2.91 1.43 1.49

Technology 2.97 7.36 19.21

Telecommunications & Media 9.72 - -

Trading/Services - 21.18 23.92

Transportation & Logistics 1.64 - -

Utilities 9.85 - -

95.05 91.72 89.18

Cash and other assets 4.95 8.28 10.82

Total 100.00 100.00 100.00

KEY PERFORMANCE DATAFOR THE FINANCIAL PERIOD ENDED


Interim Report

KEY PERFORMANCE DATA (CONTINUED)

Category 30.6.2019 30.6.2018 30.6.2017

Net Asset Value (NAV) (RM'000) 106,945 118,202 130,604

Units In Circulation (Units '000) 168,820 175,730 175,692

Net Asset Value Per Unit (RM) 0.6335 0.6726 0.7434

Highest Net Asset Value Per Unit (RM) 0.6432 0.8192 0.7665

Lowest Net Asset Value Per Unit (RM) 0.6039 0.6641 0.6707

Total Return (%)

- Capital Growth 1.42 (12.15) 10.96

- Income Distribution - - -

Total Return (%) 1.42 (12.15) 10.96

Gross Distribution Per Unit (RM) - - -

Net Distribution Per Unit (RM) - - -

Management Expense Ratio (MER) (%)* 0.81 0.84 0.84

Portfolio Turnover Ratio (PTR) (times)^ 0.23 0.64 0.15

* There were no significant changes to the MER during the period under review.

^ There were no significant changes to the PTR during the period under review.



KEY PERFORMANCE DATA (CONTINUED)

1 year 1.7.2018 to

30.6.2019

3 years 1.7.2016 to

30.6.2019

5 years 1.7.2014 to

30.6.2019

(%) (%) (%)

Average total return (0.73) 2.68 0.96

Year ended1.1.2018 to 31.12.2018

1.1.2017 to 31.12.2017

1.1.2016 to 31.12.2016

1.1.2015 to 31.12.2015

1.1.2014 to 31.12.2014

(%) (%) (%) (%) (%)

Annual total return (14.01) 20.18 (1.83) 5.67 3.80

Source: The above total return of the Fund was sourced from Lipper for Investment Management.

Bases of calculation and assumptions made in calculating returns:

Percentage growth =

NAVt = NAV at the end of the period

NAV0 = NAV at the beginning of the period Performance annualised = (1 + Percentage Growth)1/n - 1

Adjusted for unit split and distribution paid out for the period

n = Number of years

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

NAVt -1NAV0


Interim Report

Fund Performance Over the 5-year period, the Fund recorded a return of 4.91%, outperforming the benchmark return of -8.26% by 13.17%.

During the period under review, the Fund registered a return of 1.42%, underperforming the benchmark return of 1.64% by -0.22%.

The Fund’s underperformance was attributed to sector exposure and stock selection. Holdings in healthcare, materials, banks and selective rallied in construction & energy stocks dragged the Fund performance.

The Fund met its investment objective of providing investors with capital appreciation by with long-term capital appreciation by investing principally in larger companies which will appreciate in value.

The performance is calculated on NAV-to-NAV basis with gross income or dividend reinvested.

Benchmark: FTSE Bursa Malaysia 100 Index (“FBM100”).

Source: Lipper for Investment Management and www.bursamalaysia.com, as at 30 June 2019.

Past performance of the Fund is not necessarily indicative of its future performance.

MANAGER’S REPORT

Eastspring Investments Growth Fund Benchmark

Eastspring Investments Growth Fund- 5 Years Return Vs Benchmark

-10%

-20%

-30%

0%

10%

20%

30%

40%

50%

-10%

-20%

-30%

0%

10%

20%

30%

40%

50%

5 ye

ars

% C

han

ge

Jun2014

Oct2014

Jan2015

Apr2015

Jul2015

Oct2015

Jan2016

May2016

Aug2016

Nov2016

Feb2017

May2017

Aug2017

Nov2017

Mar2018

Jun2018

Sep2018

Dec2018

Mar2019

Jun2019



MANAGER’S REPORT (CONTINUED)

Analysis of Fund Performance

For the financial period ended 30 June 2019:

Income Return

Capital Return*

Total Return

Total Return of Benchmark

(%) (%) (%) (%)

0.00 1.42 1.42 1.64

* Capital return components (NAV per unit to NAV per unit).

Distribution/ Unit Split

No distribution or unit split were declared for the financial period ended 30 June 2019.

Investment Strategy During the Period Under Review

The Fund remained invested in stocks that possess long term growth prospect, attractive valuation and strong in fundamental. We were positive and invested in selective export-related stocks that stand to benefit from Malaysia cost-competitive and supply chain i.e. gloves, OSAT and EMS. The Fund also invested in cyclical blue-chip that suffered from de-rating due to concern on policy risks and industry headwinds. In the meantime, attractively price dividend stocks (REITs, utilities) with sustainable business model and positive industry outlook continue to provide stability and defensiveness for the Fund.


Interim Report

Asset Allocation

Asset Allocation30-Jun

201931-Dec

2018 Changes

(%) (%) (%)

Quoted securities 95.05 90.10 4.95 Cash and other assets 4.95 9.90 (4.95)

Asset Allocation as at 30 June 2019

There were no significant changes in asset allocation of the Fund for the period under review.

State of Affairs ofthe Fund

There have 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 period under review.

Effective from 1 January 2019, the auditor of the Fund has been changed to PricewaterhouseCoopers.

MANAGER’S REPORT (CONTINUED)

Quoted securities 95.05%

Cash and other assets 4.95%



MARKET REVIEW

For the 1Q2019, the FBM KLCI bucked the regional up-trend and was one of the worst performing indices in emerging market. The regional uplift in sentiment was due to the dramatic shift in US Federal Reserve policy to a more dovish stance and improving rhetoric from the US-China trade talks. In addition, China’s fresh stimulus measures helped sustain the positive sentiment. On the local front, investors were disappointed with Malaysian corporates as reported results were once again disappointing. 2018 was the fourth year of sub-par earnings growth. Towards the end of the 1Q2019, big cap stocks corrected post the Invest Malaysia event held on 19-20 March, amidst the risk to earnings for banks due to a possible rate cut, slower corporate earnings growth prospects and policy uncertainty.

The start of 2Q2019 saw regional markets rally on the back of positive US-China trade talks prospects and improved global outlook. However, this quickly turned sour by the month of May following the abrupt end of negotiations to the US-China trade deal with the US raising tariffs on imports from China to 25% on USD200bn of goods effective 10th May 2019. This was followed by steps to stifle China’s technology sector with what was effectively a ban on American firms from supplying parts to Chinese telecommunications giant Huawei Technologies. China retaliated with higher tariffs of up to 25% on US60bn of US goods effective 1 June 2019, with the Chinese leadership hinting at further retaliatory measures against the US. Regional markets rebounded in the month of June, with news of US and China restarting their trade talks post the G20 meeting held in Japan at the end of the month. Contrary to regional markets, the Malaysian equity market struggled to perform early 2Q2019, dampened by news of the potential exclusion of Malaysia from the FTSE Russel’s World Government Bond Index (“WBGI”) after their review come September, weaker Malaysian Ringgit, cut in the OPR of 25bps, and corporate results reporting that was not very inspiring.

The FBM KLCI closed the period under review at 1,672.13 points, down 1.09%. In tandem with the FBM KLCI, the FBM Emas (“FBMEmas”) Index closed the period under review higher 2.2% while the MSCI Asia Pacific ex-Japan Index rose by 10.64% in USD terms.1

1 Source: Bloomberg: World indices


Interim Report

REBATES AND SOFT COMMISSIONS

During the period under review, the Manager and its delegates (if any) received goods and services which directly assist the investment management of the Fund, including research and advisory services, market analyses, data and quotation services, and computer hardware and software used for and/or in support of the investment process of fund managers.

The Manager and its delegates (if any) have not received any rebates or shared any commissions from any brokers during the same period under review.



EASTSPRING INVESTMENTS GROWTH FUNDUNAUDITED FINANCIAL STATEMENTSFOR THE SIX MONTHS FINANCIAL PERIOD ENDED 30 JUNE 2019


Interim Report

STATEMENT BY THE MANAGER

We, Tang Chee Kin and Iskander Bin Ismail Mohamed Ali, being two of the Directors of Eastspring Investments Berhad, do hereby state that, in the opinion of the Manager, the accompanying unaudited financial statements set out on pages 14 to 55 are drawn up in accordance with the provisions of the Deed and give a true and fair view of the financial position of the Fund as at 30 June 2019 and of its financial performance, changes in equity and cash flows for the six months financial period ended on that date in accordance with the Malaysian Financial Reporting Standards and International Financial Reporting Standards.

For and on behalf of the Manager,

EASTSPRING INVESTMENTS BERHAD

TANG CHEE KIN

Executive Director/Chief Executive Officer

ISKANDER BIN ISMAIL MOHAMED ALI

Independent, Non-Executive Director

Kuala Lumpur

Date: 15 August 2019



TRUSTEE’S REPORT TO THE UNIT HOLDERS OF EASTSPRING INVESTMENTS GROWTH FUND

We have acted as Trustee for Eastspring Investments Growth Fund (the “Fund”) for financial period ended 30 June 2019. To the best of our knowledge, for the financial period under review, Eastspring Investments 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.

For Deutsche Trustees Malaysia Berhad

Ng Hon Leong Richard Lim Hock Seng

Head, Trustee Operations Chief Executive Officer

Kuala LumpurDate: 15 August 2019


Interim Report

UNAUDITED STATEMENT OF COMPREHENSIVE INCOMEFOR THE SIX MONTHS FINANCIAL PERIOD ENDED 30 JUNE 2019

Note

6-months financial

period ended 30.6.2019

6-months financial


RM RM

INVESTMENT INCOME/(LOSS)Gross dividend income 1,892,337 1,472,043Interest income from deposits with licensed financial institutions 173,026 229,922Net gain/(loss) on financial assets at fair value through profit or loss 6 368,760 (17,153,666)

2,434,123 (15,451,701)EXPENSESManagement fee 3 (816,899) (980,972) Trustee fee 4 (43,568) (52,318) Audit fee (4,472) (2,976) Tax agent fee (1,687) (1,687) Other expenses (17,509) (74,955) Transaction cost (132,996) (494,784)

(1,017,131) (1,607,692)

PROFIT/(LOSS) BEFORE TAXATION 1,416,992 (17,059,393)

TAXATION 5 (9,545) (7,273)

PROFIT/(LOSS) AFTER TAXATION AND TOTAL COMPREHENSIVE INCOME/(LOSS) 1,407,447 (17,066,666)

Profit/(loss) after taxation is made up of the following: Realised amount 2,460,399 14,108,697 Unrealised amount (1,052,952) (31,175,363)

1,407,447 (17,066,666)

The accompanying summary of significant accounting policies and notes to the unaudited financial statements form an integral part of these unaudited financial statements.



UNAUDITED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2019

Note 2019 2018

RM RM

ASSETSCash and cash equivalents 7 5,940,132 9,408,773Amount due from Manager 13,592 298,394Dividends receivable 188,862 416,831Tax recoverable 9,348 164,101Financial assets at fair value through profit or loss 6 101,602,667 108,392,346TOTAL ASSETS 107,754,601 118,680,445

LIABILITIESAmount due to Manager 118,733 293,153Accrued management fee 131,285 149,137Amount due to brokers 529,635 -Amount due to Trustee 7,002 7,954Other payables and accruals 23,109 27,753

TOTAL LIABILITIES 809,764 477,997

NET ASSET VALUE OF THE FUND 106,944,837 118,202,448

EQUITYUnit holders’ capital 1,940,388 6,190,039Retained earnings 105,004,449 112,012,409

NET ASSET ATTRIBUTABLE TO UNIT HOLDERS 106,944,837 118,202,448

NUMBER OF UNITS IN CIRCULATION 8 168,819,739 175,729,712

NET ASSET VALUE PER UNIT (RM) 0.6335 0.6726



Interim Report

UNAUDITED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 30 JUNE 2019

NoteUnit holders’

capitalRetainedearnings Total

RM RM RM

Balance as at 1 January 2019 10,712,201 103,597,002 114,309,203

Movement in unit holders’ contribution:Creation of units from applications 2,834,187 - 2,834,187Cancellation of units (11,606,000) - (11,606,000)Total comprehensive income for the financial period - 1,407,447 1,407,447Balance as at 30 June 2019 1,940,388 105,004,449 106,944,837

Balance as at 1 January 2018 1,756,602 129,079,075 130,835,677

Movement in unit holders’ contribution:Creation of units from applications 19,459,141 - 19,459,141Cancellation of units (15,025,704) - (15,025,704) Total comprehensive loss for the financial period - (17,066,666) (17,066,666)Balance as at 30 June 2018 6,190,039

112,012,409

118,202,448




UNAUDITED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 30 JUNE 2019

Note

6-months financial


6-months financial


RM RM

CASH FLOWS FROM OPERATING ACTIVITIESProceeds from sale of investments 26,005,648 85,229,221Purchase of investments (23,443,925) (84,145,937) Dividends received 1,837,613 1,321,908Interest received from deposits with licensed financial institutions 173,026 229,922Management fee paid (830,944) (1,003,986) Trustee fee paid (44,317) (53,545) Tax refund 154,753 -Payment for other fees and expenses (157,785) (581,398) Net cash generated from operating activities 3,694,069 996,185

CASH FLOWS FROM FINANCING ACTIVITIESCash proceeds from units created 2,908,799 19,288,870Payments for cancellation of units (11,550,784) (14,989,559) Distribution paid (28,016) (44,007)Net cash (used in)/generated from financing activities (8,670,001) 4,255,304

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (4,975,932) 5,251,489

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE FINANCIAL PERIOD 10,916,064 4,157,284

CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL PERIOD 7 5,940,132 9,408,773



Interim Report

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESFOR THE SIX MONTHS FINANCIAL PERIOD ENDED 30 JUNE 2019

The following accounting policies have been used in dealing with items which are considered material in relation to the financial statements.

A. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

The financial statements have been prepared under the historical cost convention in accordance with the Malaysian Financial Reporting Standards (“MFRS”) and International Financial Reporting Standards (“IFRS”), as modified by financial assets at fair value through profit or loss.

The preparation of financial statements in conformity with the 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 their judgment in the process of applying the Fund’s accounting policies. Although these estimates and judgment are based on the Manager’s best knowledge of current events and actions, actual results may differ.

The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note K to the financial statements.

a. Standards, amendments to published standards and interpretations that are effective:

The Fund has applied the following amendments for the first time for the financial year beginning on 1 January 2019:

• 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.

This standard is not expected to have a significant impact on the Fund’s financial statements.



B. INCOME RECOGNITION

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

Up till 31 December 2018, when a loans and receivables is impaired, the Fund reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continue unwinding the discount as interest income. Interest income on impaired loans and receivables are recognised using the original effective interest rate.

From 1 January 2019, 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 asset (after deduction of the loss allowance).

Dividend income is recognised on the ex-dividend date, when the right to receive the dividend has been established.

Realised gain or loss on disposal of investments are accounted for as the difference between the net disposal proceeds and the carrying amount of investments, determined on a weighted average cost basis.

C. TAXATION

Current tax expense is determined according to the Malaysian tax laws at the current rate based upon the taxable income during the financial period.

D. 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.


Interim Report

E. FINANCIAL ASSETS AND FINANCIAL LIABILITIES

i. Classification

Up till 31 December 2018, the Fund designates its investment in quoted securities as financial assets at fair value through profit or loss at inception.

Financial assets are designated at fair value through profit or loss when they are managed and their performance evaluated on a fair value basis.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and have been included in assets. The Fund’s loans and receivables comprise cash and cash equivalents, amount due from Manager and dividends receivable.

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

The Fund classifies amount due to Manager, accrued management fee, amount due to brokers, amount due to Trustee and other payables and accruals as other financial liabilities.

From 1 January 2019, the Fund classify its financial assets in the following measurement categories:

• those to be measured subsequently at fair value (either through other comprehensive income (“OCI”) or 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. Consequently, all investments are measured at fair value through profit or loss.

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



The Fund classifies accrued management fee, amount due to Manager, amount due to Trustee, amount due to brokers and other payables and accruals as financial liabilities measured at amortised cost.

ii. 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. Investments are initially recognised at fair value. Transaction costs are expensed in the statement of comprehensive income.

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

Financial liabilities, within the scope of MFRS 139 up to 31 December 2018 and MFRS 9 from 1 January 2019, 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.

Financial liabilities are derecognised when it is extinguished; i.e. when the obligation specified in the contract is discharged or cancelled or expired.

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 the statement of comprehensive income within “net gain/(loss) on financial assets at fair value through profit or loss” in the financial period in which they arise. Any unrealised gains however are not distributable.

Dividend income from financial assets at fair value through profit or loss is recognised in the statement of comprehensive income as part of gross dividend income when the Fund’s right to receive payments is established.

Quoted securities in Malaysia are valued at the last done market price quoted on the Bursa Malaysia Securities Berhad (“Bursa Securities”) at the date of the statement of financial position.

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


Interim Report

by the Trustee, then the securities are valued as determined in good faith by the Manager, based on the methods or basis approved by the Trustee after appropriate technical consultation.

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 maturity of the respective deposits.

Loans and receivables and other financial liabilities are subsequently carried at amortised cost using the effective interest method.

iii. Impairment

Up till 31 December 2018, for assets carried at amortised cost, the Fund assesses at the end of the reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset is or a group of financial assets are impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a “loss event”) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate.

The asset’s carrying amount of the asset is reduced and the amount of the loss is recognised in statement of comprehensive income. If “loans and receivables” have a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.

As a practical expedient, the Fund may measure impairment on the basis of an instrument’s fair value using an observable market price.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in statement of comprehensive income.



When an asset is uncollectible, it is written off against the related allowance account. Such assets are written off after all the necessary procedures have been completed and the amount of the loss has been determined.

From 1 January 2019 onwards, 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 consider 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 months 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.

Definition of default and credit-impaired financial assets

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

Write-off

The Fund writes off financial assets, in whole or in part, when it has exhausted all practical recovery efforts and has concluded that 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.


Interim Report

F. CASH AND CASH EQUIVALENTS

For the purpose of the statement of cash flows, cash and cash equivalents comprise bank balance and deposit with licensed financial institution that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

G. UNIT HOLDERS’ CAPITAL

The unit holders’ contributions to the Fund meet the criteria 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 year if unit holder 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 unit holders with the total number of outstanding units.



H. AMOUNT DUE FROM/(TO) BROKERS

Amount due from and to brokers represent receivables for Shariah-compliant securities sold and payables for Shariah-compliant securities purchased that have been contracted for but not yet settled or delivered on the statement of financial position date respectively. The due from brokers 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 broker 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 months 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.

If the credit risk increases to the point that it is considered to be credit impaired, interest income will be calculated based on the gross carrying amount adjusted for the loss allowance. A significant increase in credit risk is defined by management as any contractual payment which is more than 30 days past due.


I. SEGMENTAL INFORMATION

Operating segments are reported in a manner consistent with the internal reporting used by chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Investment Committee of the Fund’s Manager that undertakes strategic decisions for the Fund.


Interim Report

J. TRANSACTION COSTS

Transaction costs are costs incurred to acquire financial assets or liabilities at fair value through profit or loss. They include the bid-ask spread, fees and commissions paid to agents, advisors, brokers and dealers. Transaction costs, when incurred, are immediately recognised in the statement of comprehensive income as expenses.

K. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS IN APPLYING ACCOUNTING POLICIES

The Fund makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. To enhance the information contents on the estimates, certain key variables that are anticipated to have material impacts to the Funds’ results and financial position are tested for sensitivity to changes in the underlying parameters.

Estimates and judgments are continually evaluated by the Manager and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

In undertaking any of the Fund’s investment, the Manager will ensure that all assets of the Fund under management will be valued appropriately, that is at fair value and in compliance with the SC’s Guidelines on Unit Trust Funds.



1. INFORMATION ON THE FUND

Eastspring Investments Growth Fund (the “Fund”) was constituted pursuant to the execution of a Deed dated 4 May 2001, Supplemental Master Deed dated 26 May 2003, Supplemental Master Deed dated 15 February 2006, Master Supplemental Deed dated 25 July 2007 and Second Supplemental Master Deed dated 30 November 2009 between BHLB Trustee Berhad (“BHLB Trustee”) and Eastspring Investments Berhad (the “Manager”). The Fund replaced BHLB Trustee with Deutsche Trustees Malaysia Berhad (the “Trustee”) effective 1 October 2010. A Supplemental Master Deed was entered into between Eastspring Investments Berhad (the “Manager”) and Deutsche Trustees Malaysia Berhad (the “Trustee”) on 30 July 2010 to effect the change of trustee from BHLB Trustee to the Trustee, followed by Second Supplemental Master Deed dated 28 January 2011, Third Supplemental Master Deed dated 9 March 2011, Fourth Supplemental Master Deed dated 20 January 2012, Fifth Supplemental Master Deed dated 26 March 2014, Sixth Supplemental Master Deed dated 2 January 2015, Seventh Supplemental Master Deed dated 11 July 2016, Eighth Supplemental Master Deed dated 25 January 2017, Ninth Supplemental Master Deed dated 11 December 2017 and Tenth Supplemental Master Deed dated 4 June 2018 (collectively referred to as the “Deed”).

The Fund was launched on 29 May 2001 and will continue its operations until terminated as provided under Part 12 of the Deed.

The Fund invests principally in diversified portfolio of equity and equity-related securities. All investments will be subjected to the Securities Commission’s (“SC”) Guidelines on Unit Trust Funds, the Deeds, except where exemptions or variations have been approved by the SC, internal policies and procedures, and Fund’s objective.

The main objective of the Fund seeks to provide investors with long-term capital appreciation by investing principally in larger companies which will appreciate in value.

The Manager is a company incorporated in Malaysia and is related to Prudential Plc., a public listed company in the United Kingdom. The principal activity of the Manager is the establishment and management of unit trust funds and asset management.

NOTES TO THE UNAUDITED FINANCIAL STATEMENTSFOR THE SIX MONTHS FINANCIAL PERIOD ENDED 30 JUNE 2019


Interim Report

2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Fund is exposed to a variety of risks which include market risk (inclusive of price risk and interest rate risk), stock/issuer risk, fund management risk, liquidity risk, non-compliance risk, credit/default 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 Deed.

Financial instruments of the Fund are as follows:

Note

Financial assets at

amortised cost

Financial assets at

fair value through

profit or loss Total

RM RM RM

2019

Quoted securities 6 - 101,602,667 101,602,667Amount due from Manager 13,592 - 13,592Dividends receivable 188,862 - 188,862Cash and cash equivalents 7 5,940,132 - 5,940,132

6,142,586 101,602,667 107,745,253



NoteLoans and

receivables

Financial assets at

fair value through

profit or loss Total

RM RM RM

2018

Quoted securities 6 - 108,392,346 108,392,346Amount due from Manager 298,394 - 298,394Dividends receivable 416,831 - 416,831Cash and cash equivalents 7 9,408,773 - 9,408,773

10,123,998 108,392,346 118,516,344

All liabilities are financial liabilities which are carried at amortised cost.

Market risk

i. Price risk

This risk refers to changes and developments in regulations, politics and the economy of the country. The very nature of a Unit Trust Fund, however, helps mitigate this risk because a fund would generally hold a well-diversified portfolio of securities from different market sectors so that the collapse of any one security or any one market sector would not impact too greatly on the value of the Fund.

The table below shows assets of the Fund as at 30 June which are exposed to price risk:

2019 2018RM RM

Quoted securities designated at fair value through profit or loss 101,602,667 108,392,346


Interim Report

The following table summarises the sensitivity of the Fund’s net asset value and profit/(loss) after tax to movements in prices of quoted securities at the end of the reporting period. The analysis is based on the assumptions that the market price of the quoted securities increased by 5% and decreased by 5% with all other variables held constant. This represents management’s best estimate of a reasonable possible shift in the quoted securities, having regard to the historical volatility of the prices.

% Change in price Market

value

Impact on profit/ (loss) after tax/net asset value

RM RM

2019+5% 106,682,800 5,080,133-5% 96,522,534 (5,080,133)

2018+5% 113,811,963 5,419,617-5% 102,972,729 (5,419,617)

ii. Interest rate risk

Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates.

The Fund’s investments in deposits with licensed financial institutions are short term in nature. Therefore, exposure to interest rate fluctuations is minimal.

As at the end of the financial period, the Fund does not hold any other financial instruments that expose it to interest rate risk.



Stock/Issuer risk

The Fund is restricted to investment in securities issued by and securities relating to any issuer of not more than ten percent (10%) of its net asset value. Furthermore, the Fund is restricted to invest in securities issued by and securities relating to any group of companies of not more than twenty percent (20%) of its net asset value. Under such restrictions, the exposure risk to the securities of any single issuer or any one group of companies is minimised.

Fund management risk

There is the risk that the management company may not adhere to the investment mandate of the respective Fund. With close monitoring by the investment committee, back office system being incorporated with limits and controls, and regular reporting to the senior management team, the management company is able to manage such risk. The Trustee has an oversight function over management of the Fund by the management company to safeguard the interest of unit holders.

Liquidity risk

Liquidity risk is the risk that the Fund will encounter difficulty in meeting its financial obligations. Generally, all investments are subject to a certain degree of liquidity risk depending on the nature of the investment instruments, market, sector and other factors. For the purpose of the Fund, the Manager will attempt to balance the entire portfolio by investing in a mix of assets with satisfactory trading volume and those that occasionally could encounter poor liquidity. This is expected to reduce the risks for the entire portfolio without limiting the Fund’s growth potentials.

The Fund maintains sufficient level of liquid assets, after consultation with the Trustee, to meet anticipated payments and cancellations of units by unit holders. Liquid assets comprise bank balance and deposits with licensed financial institutions and other instruments which are capable of being converted into cash within 7 days.


Interim Report

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

Less than 1 month

Between 1 month to 1 year Total

RM RM RM

2019Amount due to Manager 118,733 - 118,733Accrued management fee 131,285 - 131,285Amount due to brokers 529,635 - 529,635Amount due to Trustee 7,002 - 7,002Other payables and accruals - 23,109 23,109Contractual cash outflows 786,655 23,109 809,764

2018Amount due to Manager 293,153 - 293,153Accrued management fee 149,137 - 149,137Amount due to Trustee 7,954 - 7,954Other payables and accruals - 27,753 27,753Contractual cash outflows 450,244 27,753 477,997

Non-compliance risk

Non-compliance risk arises when the Manager and others associated with the Fund are not compliant to the rules set out in the Fund’s constitution or the law that governs the Fund or applicable internal control procedures, or act fraudulently or dishonestly.

The non-compliance may expose the Fund to higher risks which may result in a fall in the value of the Fund which in turn may affect its investment goals. However, the risk can be mitigated by the internal controls and compliance monitoring undertaken by the Manager.



Credit/Default risk

Credit risk refers to the ability of an issuer or a counter party to make timely payments of interest, principals and proceeds from realisation of investments.

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. For amount due from brokers, the settlement terms are governed by the relevant rules and regulations as prescribed by Bursa Securities. The settlement terms of the proceeds from the creation of units receivable from the Manager are governed by the SC’s Guidelines on Unit Trust Funds.

The credit/default risk is minimal as all transactions in quoted securities are settled/paid upon delivery using approved brokers.

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

Cash and cash

equivalentsDividends receivable

Amount due from Manager Total

RM RM RM RM

2019Finance- AA1 738,807 - - 738,807- AAA 5,201,325 - - 5,201,325Consumer Products & Services- NR - 107,770 - 107,770Financial Services- NR - 55,500 - 55,500Technology- NR - 25,592 - 25,592Other- NR - - 13,592 13,592

5,940,132 188,862 13,592 6,142,586


Interim Report

Cash and cash

equivalentsDividends receivable

Amount due from Manager Total

RM RM RM RM

2018Finance- AA1 47,055 - - 47,055- AAA 9,361,718 - - 9,361,718Construction- NR - 14,550 - 14,550Financial Services- NR - 195,456 - 195,456Health Care- NR - 8,988 - 8,988Property- NR - 62,686 - 62,686Technology- NR - 55,239 - 55,239Trading/Services- NR - 79,896 - 79,896Other- NR - 16 298,394 298,410

9,408,773 416,831 298,394 10,123,998

None of these assets are past due or impaired.



Capital risk

The capital of the Fund is represented by equity consisting of unit holders’ capital of RM1,940,388 (2018: RM6,190,039) and retained earnings of RM105,004,449 (2018: RM112,012,409). 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 unit holders. 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 unit holders and benefits for other stakeholders and to maintain a strong capital base to support the development of the investment activities of the Fund.

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 trading securities) are based on quoted market prices at the close of trading on the period end date. The Fund utilises the last traded market price for financial assets where the last traded price falls within the bid-ask spread. In circumstances where the last traded price is not within the bid-ask spread, the Manager will determine the point within the bid-ask spread that is representative of the fair value.

An active market is a market in which transactions for the asset 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.


Interim Report

Fair value hierarchy

i. The table below analyses financial instruments carried at fair value by valuation method. The different levels have been defined as follows:

• 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 level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement.

Assessing the significance of a particular input to the fair value measurement in its entirety requires judgment, considering factors specific to the asset or liability.

The determination of what constitutes ‘observable’ requires significant judgment by the Fund. The Fund considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.



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

Level 1 Level 2 Level 3 Total

RM RM RM RM

2019

Financial assets at fair value through profit or loss: Quoted securities 101,602,667 - - 101,602,667

2018

Financial assets at fair value through profit or loss: Quoted securities 108,392,346 - - 108,392,346

Investments whose values are based on quoted market prices in active markets, and are therefore classified within Level 1, include active quoted securities. 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 E to the financial statements.

ii. The carrying value of amount due from Manager, dividends receivable, cash and cash equivalents and all liabilities are a reasonable approximation of their fair values due to their short term nature.


Interim Report

3. MANAGEMENT FEE

In accordance with the Deed, the Manager is entitled to a management fee at a rate not exceeding 3.00% per annum of the net asset value of the Fund accrued and calculated on daily basis.

For the financial period ended 30 June 2019, the management fee is recognised at a rate of 1.50% (2018: 1.50%) per annum of the net asset value of the Fund, calculated on daily basis.

There will be no further liability to the Manager in respect of the management fee other than the amounts recognised above.

4. TRUSTEE’S FEE

In accordance with the Deed, the Trustee is entitled to an annual fee at a rate not exceeding 0.20% per annum of the net asset value of the Fund, subject to a minimum fee of RM35,000 per annum.

For the financial period ended 30 June 2019, the Trustee’s fee is recognised at a rate of 0.08% (2018: 0.08%) per annum of the net asset value of the Fund, inclusive of local custodian fee, calculated on daily basis.

There will be no further liability to the Trustee in respect of the Trustee fee other than the amounts recognised above.

5. TAXATION

6-months financial


6-months financial


RM RM

Tax charged for the financial period: Current taxation – local 9,545 7,273



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

6-months financial


6-months financial


RM RM

Profit/(loss) before taxation 1,416,992 (17,059,393)

Tax at Malaysian statutory rate of 24% (2018: 24%) 340,078 (4,094,254)

Tax effects of: (Investment income exempt from tax)/ investment loss not deductible for tax purpose (561,282) 3,725,864 Expenses not deductible for tax purposes 46,982 149,699 Restriction on tax deductible expenses for Unit Trust Funds 197,129 236,148 Income subject to different tax rate (13,362) (10,184)

Taxation 9,545 7,273

6. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

2019 2018

RM RM

Designated at fair value through profit or loss: Quoted securities 101,602,667 108,392,346

Net gain/(loss) on financial assets at fair value through profit or loss: Realised gain on disposals 1,421,712 14,021,697 Change in unrealised fair value loss (1,052,952) (31,175,363)

368,760 (17,153,666)


Interim Report

i. Quoted securities

Name of counter QuantityAggregate

cost

Fair value as at

30.6.2019

Percentage of net asset value of the

FundUnits RM RM %

Consumer Products & Services Bermaz Auto Berhad 242,000 556,503 643,720 0.60DRB-HICOM Berhad 501,000 1,068,172 1,102,200 1.03Genting Berhad 697,000 5,500,660 4,718,690 4.41Genting Malaysia Berhad 1,319,000 5,549,755 4,273,560 4.00Leong Hup International Berhad 40,200 44,220 41,004 0.04Padini Holdings Berhad 132,000 573,883 477,840 0.45Petronas Dagangan Berhad 95,000 2,441,794 2,413,000 2.26PPB Group Berhad 115,000 1,950,463 2,150,500 2.01Sime Darby Berhad 1,011,000 2,416,998 2,284,860 2.14

4,152,200 20,102,448 18,105,374 16.94Energy Dialog Group Berhad 724,000 1,620,449 2,360,240 2.21Serba Dinamik Holdings Berhad 132,000 545,318 531,960 0.50

856,000 2,165,767 2,892,200 2.71



i. Quoted securities (continued)


cost

Fair value as at

30.6.2019


FundUnits RM RM %

Financial ServicesAMMB Holdings Berhad 370,000 1,617,641 1,565,100 1.46Bursa Malysia Berhad 120,000 943,524 840,000 0.79CIMB Group Holdings Berhad 1,084,532 7,293,211 5,834,782 5.46Hong Leong Bank Berhad 60,000 1,131,290 1,140,000 1.07Hong Leong Financial Group Berhad 120,000 2,216,885 2,224,800 2.08Malayan Banking Berhad 884,645 8,708,027 7,855,648 7.35Public Bank Berhad 410,000 9,864,021 9,430,000 8.82RHB Bank Berhad 294,300 1,641,213 1,645,137 1.54

3,343,477 33,415,812 30,535,467 28.57Health Care Hartalega Holdings Berhad 376,000 2,382,129 1,970,240 1.84Kossan Rubber Industries Berhad 805,000 3,244,398 3,211,950 3.00Supermax Corporation Berhad 650,000 1,020,240 1,085,500 1.02Top Glove Corporation Berhad 412,000 2,282,540 2,022,920 1.89

2,243,000 8,929,307 8,290,610 7.75Industrial Products & Services ATA IMS Berhad 160,000 270,400 252,800 0.24HSS Engineers Berhad 300,000 337,860 348,000 0.33Petronas Chemicals Group Berhad 507,000 4,297,129 4,258,800 3.98

967,000 4,905,389 4,859,600 4.55


Interim Report



cost

Fair value as at

30.6.2019


FundUnits RM RM %

PlantationIOI Corporation Berhad 530,000 2,456,497 2,252,500 2.11Kuala Lumpur Kepong Berhad 87,000 2,149,910 2,136,720 2.00Sime Darby Plantation Berhad 510,000 2,420,065 2,509,200 2.35

1,127,000 7,026,472 6,898,420 6.46PropertyLBS Bina Group Berhad 584,380 642,818 467,504 0.44Malaysian Resources Corporation Berhad 548,000 517,352 520,600 0.49Sentoria Group Berhad 960,600 240,150 57,636 0.05

2,092,980 1,400,320 1,045,740 0.98REITSIGB Real Estate Investment Trust 700,000 1,183,000 1,337,000 1.25KIP Real Estate Investment Trust 2,108,200 2,108,200 1,770,888 1.66

2,808,200 3,291,200 3,107,888 2.91TechnologyGlobetronics Technology Berhad 894,600 2,094,614 1,493,982 1.40Inari Amertron Berhad 770,000 579,715 1,232,000 1.15Malaysian Pacific Industries Berhad 48,800 432,368 449,936 0.42

1,713,400 3,106,697 3,175,918 2.97





cost

Fair value as at

30.6.2019


FundUnits RM RM %

Telecommunications & Media Astro Malaysia Holdings Berhad 370,000 551,966 536,500 0.50Axiata Group Berhad 725,000 3,229,920 3,610,500 3.38Digi.Com Berhad 570,000 2,594,982 2,878,500 2.69Maxis Berhad 381,000 2,170,138 2,122,170 1.98Telekom Malaysia Berhad 150,000 410,898 600,000 0.56TIME dotCom Berhad 73,000 588,380 654,810 0.61

2,269,000 9,546,284 10,402,480 9.72Transportation & LogisticsMalaysia Airports Holding Berhad 137,000 1,148,526 1,168,610 1.09MMC Corporation Berhad 516,000 546,083 588,240 0.55

653,000 1,694,609 1,756,850 1.64


Interim Report



cost

Fair value as at

30.6.2019


FundUnits RM RM %

UtilitiesGas Malaysia Berhad 185,000 528,157 525,400 0.49Petronas Gas Berhad 122,000 2,199,701 2,117,920 1.98Tenaga Nasional Berhad 570,000 9,052,284 7,888,800 7.38

877,000 11,780,142 10,532,120 9.85

TOTAL QUOTED SECURITIES 23,102,257

107,364,447

101,602,667 95.05

ACCUMULATED UNREALISED LOSS ON FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (5,761,780)

FAIR VALUE OF FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 101,602,667



i. Quoted securities


cost

Fair value as at

30.6.2018


FundUnits RM RM %

ConstructionAMMB Holdings Berhad 485,000 1,250,621 868,150 0.73Malaysia Resources Corporation Berhad 1,500,000 1,542,509 900,000 0.76Malaysia Resources Corporation Berhad – Warrant 150,001 - 31,500 0.03MGB Berhad (formerly known as ML Global Berhad) 4,415,200 3,311,400 4,106,136 3.47

6,550,201 6,104,530 5,905,786 4.99FinanceBursa Malaysia Berhad 120,000 943,524 882,000 0.75CIMB Group Holdings Berhad 1,761,250 11,949,012 9,598,813 8.12Hong Leong Bank Berhad 75,100 1,344,666 1,366,820 1.16Malayan Banking Berhad 1,010,800 10,027,617 9,097,200 7.70Public Bank Berhad 480,000 11,548,122 11,212,799 9.49RHB Bank Berhad 60,500 313,390 330,330 0.28Syarikat Takaful Malaysia Berhad 585,200 2,392,204 2,305,688 1.95

4,092,850 38,518,535 34,793,650 29.45Health CareKossan Rubber Industries Berhad 149,800 939,454 1,264,312 1.07Top Glove Corporation Berhad 265,400 1,259,865 3,221,956 2.73

415,200 2,199,319 4,486,268 3.80


Interim Report



cost

Fair value as at

30.6.2018


FundUnits RM RM %

Industrial ProductCahya Mata Sarawak Berhad 200,400 859,162 470,940 0.40DRB-HICOM Berhad 540,000 1,025,622 1,058,400 0.90Lotte Chemical Titan Holding Berhad 240,000 1,248,168 1,188,000 1.01Petronas Chemicals Group Berhad 690,000 5,848,164 5,802,900 4.91Petronas Gas Berhad 67,000 1,231,701 1,159,100 0.98

1,737,400 10,212,817 9,679,340 8.20Infrastructure Project CompanyDigi.Com Berhad 680,000 3,095,768 2,822,000 2.39

ManufacturingPecca Group Berhad 1,252,100 1,990,081 1,089,327 0.92

PlantationIOI Corporation Berhad 530,000 2,456,497 2,406,200 2.04

Property LBS Bina Group Berhad 6,268,580 4,226,633 5,485,008 4.64LBS Bina Group Berhad - Preference share 584,380 642,818 584,380 0.49S P Setia Berhad 673,260 2,059,737 2,087,106 1.77Sentoria Group Berhad 2,427,100 2,169,495 1,359,176 1.15Sentoria Group Berhad - Warrant 1,010,600 252,650 176,855 0.15Sunway Berhad 400,000 603,520 620,000 0.52UEM Sunrise Berhad 2,068,700 2,385,941 1,468,777 1.24

13,432,620 12,340,794 11,781,302 9.96REITSKIP Real Estate Investment Trust 2,108,200 2,108,200 1,686,560 1.43





cost

Fair value as at

30.6.2018


FundUnits RM RM %

TechnologyInari Amertron Berhad 1,764,508 1,328,457 3,987,788 3.37Unisem (M) Berhad 1,155,400 2,081,754 2,668,974 2.26Vitrox Corporation Berhad 366,900 496,582 2,047,302 1.73

3,286,808 3,906,793 8,704,064 7.36Trading/ServicesAxiata Group Berhad 480,000 1,807,872 1,435,200 1.21Dialog Group Berhad 1,290,300 2,522,808 3,987,027 3.37Genting Berhad 371,600 3,302,886 3,125,156 2.64Genting Malaysia Berhad 475,000 2,412,763 2,318,000 1.96Petronas Dagangan Berhad 50,000 1,255,990 1,240,000 1.05Telekom Malaysia Berhad 249,000 1,555,697 774,390 0.66Tenaga Nasional Berhad 770,000 12,228,524 11,272,800 9.54Uzma Berhad 819,700 1,749,703 885,276 0.75

4,505,600 26,836,243 25,037,849 21.18

TOTAL QUOTED SECURITIES 38,590,979 109,769,577 108,392,346 91.72

ACCUMULATED UNREALISED LOSS ON FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (1,377,231)

FAIR VALUE OF FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 108,392,346


Interim Report

7. CASH AND CASH EQUIVALENTS

2019 2018

RM RM

Bank balance with a licensed bank 738,807 47,055Deposit with a licensed financial institution 5,201,325 9,361,718

5,940,132 9,408,773

The effective weighted average interest rate of short term deposit with a licensed financial institution per annum as at the date of the financial position are as follow:

2019 2018

% %

Deposit with a licensed financial institution 3.10 3.35

The deposit have an average maturity of 1 day (2018: 3 days).

8. UNITS IN CIRCULATION

2019 2018

No. of units No. of units

At the beginning of the financial period 183,011,696 170,890,594Creation of units from applications during the financial period 4,559,306 25,062,378Cancellation of units during the financial period (18,751,263) (20,223,260)

At the end of the financial period 168,819,739 175,729,712



9. TRANSACTIONS WITH BROKERS

Details of transactions with the top 10 brokers are as follows:

Name of brokersValue of

trades

Percentage of total trades

Brokerage fees

Percentage of total

brokerage fees

RM % RM %

2019

Maybank Investment Bank Berhad 16,177,134 32.55 34,263 32.47Nomura Securities Malaysia Sdn Bhd 5,087,163 10.24 10,785 10.10CIMB Investment Bank Berhad 4,443,952 8.94 9,866 9.25Affin Hwang Investment Bank Berhad 4,322,991 8.70 9,064 8.58UOB Kay Hian Securities (M) Sdn Bhd 3,865,694 7.78 8,100 7.68Credit Suisse Securities (Malaysia) Sdn Bhd 2,828,046 5.69 5,851 5.62Citigroup Global Markets (M) Sdn Bhd 2,654,938 5.34 5,588 5.28CLSA Securities Malaysia Sdn Bhd 2,382,663 4.79 4,913 4.73KAF Seagroatt & Campbell Securities Sdn Bhd 2,115,843 4.27 4,486 4.20RHB Investment Bank Berhad 1,900,087 3.82 3,886 3.77Others 3,916,787 7.88 8,884 8.32

49,695,298 100.00 105,686 100.00


Interim Report

Name of brokersValue of

trades

Percentage of total trades

Brokerage fees

Percentage of total

brokerage fees

RM % RM %

2018

Maybank Investment Bank Berhad 24,306,376 14.35 69,673 16.03Credit Suisse Securities (Malaysia) Sdn Bhd 18,807,400 11.10 48,721 11.21UOB Kay Hian Securities (M) Sdn Bhd 17,893,117 10.57 47,062 10.85CIMB Investment Bank Berhad 16,633,629 9.82 34,637 7.97RHB Investment Bank Berhad 15,579,067 9.20 40,908 9.41J.P. Morgan Securities (Malaysia) Sdn Bhd 15,326,413 9.05 40,510 9.32Citigroup Global Markets (M) Sdn Bhd 13,785,207 8.14 36,367 8.37Kenanga Investment Bank Berhad 8,270,267 4.88 21,452 4.94CLSA Securities Malaysia Sdn Bhd 8,044,679 4.75 18,228 4.19Nomura Securities Malaysia Sdn Bhd 6,461,099 3.81 16,968 3.90Others 24,267,903 14.33 60,004 13.81

169,375,157 100.00 434,530 100.00

All brokers highlighted above are not related to the Manager.



10. UNITS HELD BY THE MANAGER

The related party of and its relationship with the Fund are as follows:

Related party Relationship

Eastspring Investments Berhad The Manager

2019 2018

No. of units RM No. of units RM

Eastspring Investments Berhad 2,610 1,653 2,505 1,685

The above units were transacted at the prevailing market price.

The units are held legally by the Manager and are within the prescribed limit allowed by SC’s Guidelines on Unit Trust Funds. Other than the above, there were no units held by the Directors or parties related to the Manager.


Interim Report

11. MANAGEMENT EXPENSE RATIO (“MER”)

2019 2018

% %

MER 0.81 0.84

MER is derived from the following calculation:

MER = (A + B + C + D + E)X 100

F

A = Management fee

B = Trustee fee

C = Audit fee

D = Tax agent fee

E = Other expenses (excluding transaction cost)

F = Average net asset value of the Fund calculated on a daily basis

The average net asset value of the Fund for the financial period calculated on a daily basis is RM109,817,769 (2018: RM131,874,161).

12. PORTFOLIO TURNOVER RATIO (“PTR”)

2019 2018

PTR (times) 0.23 0.64

PTR is derived from the following calculation:

(Total acquisitions for the financial period + total disposals for the financial period) ÷ 2

Average net asset value of the Fund for the financial period calculated on a daily basis

where: total acquisitions for the financial period = RM23,973,559 (2018: RM84,145,936)total disposals for the financial period = RM25,721,739 (2018: RM85,229,221)



13. SEGMENTAL INFORMATION

The internal reporting provided to the chief operating decision-maker 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 chief operating decision-maker is responsible for the performance of the Fund and considers the business to have a single operating segment located in Malaysia. Asset allocation decisions are based on a single, integrated investment strategy and the Fund’s performance is evaluated on an overall basis.

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

The Fund has a diversified unit holder population. However, as at 30 June 2019, there was no unit holder (2018: 1 unit holder) who held more than 10% of the Fund’s NAV. The unit holder’s holding as of 30 June 2018 was 10.65%.

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


Interim Report

14. MFRS 9 FINANCIAL INSTRUMENTS

As disclosed in Note A, the Fund has adopted MFRS 9, which resulted in changes to the accounting policies and adjustments to the financial position. The main changes are as follows:

a. Classification and measurement of financial assets

Up to 31 December 2018, financial assets were classified in the following categories: financial assets at fair value through profit or loss (“FVTPL”) and loans and receivables. Note E sets out the details of accounting policies for classification and measurement of financial instruments under MFRS 139.

From 1 January 2019, the Fund has applied the following MFRS 9’s classification approach to all types of financial assets:

• Investments in equity instruments: These instruments are always measured at fair value with changes in fair value presented in profit or loss unless the Fund has made an irrevocable choice to present changes in fair value in other comprehensive income (‘OCI’) for investments that are not held for trading.

b. Impairment

From 1 January 2019 onwards, 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 consider 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 months 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.

Definition of default and credit-impaired financial assets


As disclosed above, the adoption of MFRS 9 in 2018 resulted in reclassification and change in measurement of certain financial assets and financial liabilities.

15. APPROVAL OF FINANCIAL STATEMENTS The financial statements have been approved for issue by the Manager on

15 August 2019.


Interim Report



CORPORATE DIRECTORY

THE MANAGERNAME

EASTSPRING INVESTMENTS BERHAD

COMPANY NO.

531241-U

REGISTERED OFFICE

Level 25, Menara Hong Leong

No. 6, Jalan Damanlela

Bukit Damansara

50490 Kuala Lumpur

BUSINESS OFFICE

Level 22, Menara Prudential

Persiaran TRX Barat

55188 Tun Razak Exchange

Kuala Lumpur

TELEPHONE NO.

603-2778 3888

FAX NO.

603-2789 7220

EMAIL

[email protected]

WEBSITE

www.eastspring.com/my

TRUSTEENAME

DEUTSCHE TRUSTEES MALAYSIA BERHAD

COMPANY NO.

763590-H

REGISTERED OFFICE & BUSINESS OFFICE

Level 20, Menara IMC

No. 8, Jalan Sultan Ismail

50250 Kuala Lumpur

TELEPHONE NO.

603-2053 7522

FAX NO.

603-2053 7526

SALE & PURCHASE OF UNITSEastspring Investments BerhadLevel 22, Menara Prudential

Persiaran TRX Barat

55188 Tun Razak Exchange

Kuala Lumpur

TELEPHONE NO.

603-2778 1000

FAX NO.

603-2789 7225


Interim Report

BRANCHESPetaling JayaEastspring Investments Berhad

A-17-P1 & M

Block A, Jaya One

72A, Jalan Universiti

46200 Petaling Jaya, Selangor

TELEPHONE NO.

603-7948 1288

Kota KinabaluEastspring Investments Berhad

Suite E3, 9th Floor

CPS Tower, Centre Point Sabah

No. 1, Jalan Centre Point

88000 Kota Kinabalu, Sabah

TELEPHONE NO.

6088-238 613

ENQUIRIESCLIENT SERVICES

603-2778 1000

EASTSPRING INVESTMENTSGROWTH FUND

FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 30 JUNE 2019

INTERIM REPORT

Eastspring Investments Berhad (531241-U)

Level 22, Menara Prudential, Persiaran TRX Barat55188 Tun Razak Exchange, Kuala LumpurT: (603) 2778 3888 F: (603) 2789 7220eastspring.com/my

Client ServicesT: (603) 2778 1000 [email protected]

eastspring investments growth fundeastspring investments growth fund for the six months financial...

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