Reaching out to you
Hong Leong Consumer Products Sector Fund Interim Report 2020/2021 31 March 2021 Unaudited Hong Leong Consumer Products Sector Fund
Contents
Page Manager’s Review and Report 1-9 Statement by the Manager 10 Trustee’s Report 11 Condensed Statement of Comprehensive Income 12 Condensed Statement of Financial Position 13 Condensed Statement of Changes in Equity 14 Condensed Statement of Cash Flows 15 Notes to the Condensed Financial Statements 16-41 Performance Data 42-43 Corporate Information 44 Corporate Directory 45 Manager’s Review and Report
I. FUND INFORMATION
Fund Name Hong Leong Consumer Products Sector Fund
Fund Category Equity
Fund Type Growth
Investment Objective To provide the Malaysian public with an affordable and flexible access into an investment portfolio that focuses solely on securities that are classified under the Bursa Malaysia Consumer Product sector.
Benchmark Bursa Malaysia Consumer Product & Services Index
Distribution Policy The Fund intends to provide Unitholders with Long-Term^ capital growth. As such, cash distribution will be incidental to the overall capital growth objective and a substantial portion of the income returns from investments will be reinvested. The Fund may also declare distributions in the form of additional Units to its Unitholders.
Breakdown of Unitholdings By Size Size of Holdings No. of Unitholders No. of Units Held 5,000 and below 119 392,273.25 5,001 to 10,000 159 1,134,536.03 10,001 to 50,000 818 21,464,252.60 50,001 to 500,000 608 75,308,104.64 500,001 and above 46 156,775,356.87
Note: ^ Long-Term refers to a period of above 5 years.
HONG LEONG CONSUMER PRODUCTS SECTOR FUND 1 II. FUND PERFORMANCE
Chart 1: Performance of the Fund versus the benchmark covering the last five-year financial period
40
30
20
10
0
Percentage Growth Percentage -10
-20
-30 31/03/2017 31/03/2021 31/03/2018 31/03/2016 31/03/2019 31/03/2020
From 31/03/2016 To 31/03/2021
Hong Leong Consumer Bursa Malaysia Products Sector Fund Consumer Products (HLCPSF) 25.67 & Services 7.08
Source: Lipper For Investment Management, In Malaysian Ringgit terms, ex- distribution, NAV Per Unit-to-NAV Per Unit basis with gross income (if any) from HLCPSF reinvested.
Past performance is not necessarily indicative of future performance and unit prices and investment returns may go down, as well as up.
2 HONG LEONG CONSUMER PRODUCTS SECTOR FUND Performance Review
This Interim Report covers the six-month financial period from 1 October 2020 to 31 March 2021.
The Fund posted a return of 10.20% in the past six months while its benchmark the Bursa Malaysia Consumer Products & Services Index registered a return of 13.03%. During the financial period under review, the Fund had distributed income distribution of 1.00 sen per unit to its Unitholders on 19 January 2021. Prior to the income distribution, the cum-distribution net asset value (NAV) per unit of the Fund was RM0.2837 while the ex-distribution NAV per unit was RM0.2737. Unitholders should note that income distribution has the effect of reducing the NAV per unit of the Fund after distribution.
For the five-year financial period ended 31 March 2021, the Fund registered a return of 25.67% compared to the benchmark’s return of 7.08% while distributing a total gross income of 25.47 sen per unit.
Table 1: Performance of the Fund for the following periods as at 31 March 2021 (Source: Lipper For Investment Management)
31/12/20- 30/09/20– 31/03/20– 31/03/18– 31/03/16– 31/03/11– 29/08/00– 31/03/2021 31/03/21 31/03/21 31/03/21 31/03/21 31/03/21 31/03/21 Since 3 Months 6 Months 1 Year 3 Years 5 Years 10 Years Launch HLCPSF (%) 3.94 10.20 15.36 -0.53 25.67 99. 39 505.27 Benchmark (%) 5.38 13.03 25.05 -9.49 7.08 38.31 281.45
HONG LEONG CONSUMER PRODUCTS SECTOR FUND 3 Table 2: Return of the Fund based on NAV Per Unit-to-NAV Per Unit basis for the period 30 September 2020 to 31 March 2021 (Source: Lipper For Investment Management)
31-Mar-21 30-Sep-20 Return (%) NAV Per Unit RM0.2860 RM0.2690 10.20# Benchmark 637.93 564.38 13.03 vs Benchmark (%) - - -2.83 # Return is calculated after adjusting for income distribution during the period under review.
Table 3: Financial Highlights The Net Asset Value attributable to Unitholders is represented by: 31-Mar-21 30-Sep-20 Change (RM) (RM) (%)
Unitholders’ Capital 63,499,997 64,907,212 -2.17 Retained Earnings 9,443,787 3,283,266 187.63 Net Asset Value 72,943,784 68,190,478 6.97
Units in Circulation 255,074,523 253,505,705 0.62
Table 4: The Highest and Lowest NAV Per Unit, Total Return of the Fund and the breakdown into Capital Growth and Income Distribution for the financial period/years
Financial Period Financial Year Financial Year Financial Year 30/09/20– 30/09/19– 30/09/18– 30/09/17– 31/03/21 30/09/20 30/09/19 30/09/18 Highest NAV Per Unit (RM) 0.2911 0.3479 0.3774 0.4090 Lowest NAV Per Unit (RM) 0.2516 0.2417 0.3385 0.3671 Capital Growth (%) 6.32 -20.72 -10.12 -0.50 Income Distribution (%) 3.88 7. 36 10.67 13.73 Total Return (%) 10.20 -13.36 0.55 13.23
Source: Lipper For Investment Management, In Malaysian Ringgit terms, ex- distribution, NAV Per Unit-to-NAV Per Unit basis with gross income (if any) from HLCPSF reinvested.
4 HONG LEONG CONSUMER PRODUCTS SECTOR FUND Table 5: Average Total Return of the Fund
31/03/20– 31/03/18– 31/03/16– 31/03/21 31/03/21 31/03/21 1 Year 3 Years 5 Years Average Total Return (%) 15.36 -0.18 5.13 Source: Lipper For Investment Management, In Malaysian Ringgit terms, ex- distribution, NAV Per Unit-to-NAV Per Unit basis with gross income (if any) from HLCPSF reinvested.
Table 6: Annual Total Return of the Fund
Financial Year 30/09/19– 30/09/18– 30/09/17– 30/09/16– 30/09/15– 30/09/20 30/09/19 30/09/18 30/09/17 30/09/16 Annual Total Return (%) -13.36 0.55 13.23 5.74 21.01 Source: Lipper For Investment Management, In Malaysian Ringgit terms, ex- distribution, NAV Per Unit-to-NAV Per Unit basis with gross income (if any) from HLCPSF reinvested.
HONG LEONG CONSUMER PRODUCTS SECTOR FUND 5 III. INVESTMENT PORTFOLIO
Chart 2: Asset Allocation - October 2020 to March 2021
Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21
Equities
Chart 3: Sector Allocation as at 31 March 2021
Deposits & Cash Equivalents 5.54%
Consumer Products & Services 94.46%
6 HONG LEONG CONSUMER PRODUCTS SECTOR FUND Strategies employed by the fund during the period under review
During the period under review, the Fund has accumulated selected consumer stocks which have export exposure to ride on the global economic recovery. The core holdings of the Fund remain relatively unchanged. The Fund continues to invest in companies with a stable profitability track record, competent management and ability to maintain long-term profit margins.
As of 31 March 2021, the Fund’s top three holdings are Heineken Malaysia Berhad (8.84%), Nestle (Malaysia) Berhad (8.33%) and Genting Berhad (8.07%).
Notification of Changes
A 3rd Supplementary Master Prospectus (“3rd SMP”) was issued on 31 December 2020 which is supplementary to and to be read in conjunction with the Hong Leong Master Prospectus dated 23 August 2019 (“MP”), the 1st Supplementary Master Prospectus dated 18 November 2019 (“1st SMP”) and the 2nd Supplementary Master Prospectus dated 27 March 2020 (“2nd SMP”).
Changes that require your attention are:
· The information stated under the “The Key Personnel of the Investment Team” was amended to reflect the change of designated Fund Manager effective 1 October 2020; and · The section on “Fund Switching” was partly re-arranged for clarity purposes.
A copy of the MP, the 1st SMP, the 2nd SMP and the 3rd SMP can be obtained from our website at www.hlam.com.my.
For the financial period under review, there were no significant changes in the state of affairs of the Fund or circumstances that would materially affect the interest of Unitholders up to the date of this Manager’s report.
HONG LEONG CONSUMER PRODUCTS SECTOR FUND 7 IV. MARKET REVIEW
During the period under review, the MSCI AC Asia Pacific ex Japan Index surged 21.6%. The best performing markets were South Korea and Taiwan while the laggards were Malaysia and China. In the local market, the FTSE Bursa Malaysia KLCI climbed 4.6%. Small caps outperformed as the FTSE Bursa Malaysia Small Cap Index jumped 30.5%.
Global markets marched higher in the fourth quarter of 2020. Investor sentiment was lifted by successful rollout of COVID-19 vaccines in developed markets and the ease of concern on United States (US) presidential election. The signing into law a massive USD2.3 trillion pandemic bill by US President Donald Trump on late December had also further boosted the stock markets. The technology sector continued to rally on the back of strong chip demand for stay-at-home devices.
Entering into the first quarter of 2021, global markets continued to rally on the back of strong corporate earnings and improving economic data. US President Joe Biden has unveiled another stimulus package worth USD1.9 trillion to ensure US economy recovery. However, investor sentiment was interrupted by rising Treasury bond yield on inflationary concerns. Nevertheless, the concern eased after the Federal Reserve maintained its dovish stance by keeping interest rate near zero until the economy reaches maximum employment.
In the local market, the performance of FTSE BM KLCI lagged behind regional peers, dragged by underperformance in healthcare stocks. Sentiment in the healthcare sector was adversely affected by ASP sustainability concern after vaccine rollout. Investor sentiment was dampened in the first quarter of 2021, after implementation of Movement Control Order (MCO) 2.0 amid escalating new infections. However, commodity and technology sectors have performed well due to strong demand on global economic recovery. Meanwhile, Malaysia’s corporates showed improved earnings in the latest quarterly reports, signalling that the local economic recovery is on-track.
8 HONG LEONG CONSUMER PRODUCTS SECTOR FUND V. FUTURE PROSPECTS AND PROPOSED STRATEGIES
Economic indicators have shown that global economic activities is picking up gradually from the contraction in 2020. Near-term volatility is expected to continue as the pandemic has yet to be successfully contained despite rollout of vaccination. We believe the global economy growth will be sustainable over the longer term, driven by substantial stimulus packages implemented coupled with accommodative interest rate environment.
Investor sentiment in the local market is expected to be affected by heightened new infections in near term. However, the sentiment should improve later along with the economic growth. The consumer sentiment was negatively impacted by weak spending due to implementation of MCO 2.0 but has started to improve gradually on relaxing movement restriction. We would accumulate quality stocks should the stock prices decline to attractive valuations.
In such challenging times for the local consumer companies, we believe that the performance of quality consumer companies to be resilient. We expect well-managed companies that have shown a credible profitability track record to command a valuation premium. The Fund seeks to gain exposure to companies that are able to maintain pricing power to preserve margins and profitability, as well as companies that have export exposure to benefit from strong overseas demand.
VI. SOFT COMMISSIONS
The Manager has received soft commissions from brokers/dealers in the form of goods and services such as research materials, data and quotation services incidental to investment management of the Fund and investment related publications. Such soft commissions received are of demonstrable benefit to Unitholders.
HONG LEONG CONSUMER PRODUCTS SECTOR FUND 9 STATEMENT BY THE MANAGER
I, Hoo See Kheng, as the Director of Hong Leong Asset Management Bhd, do hereby state that, in the opinion of the Manager, the accompanying unaudited condensed financial statements set out on pages 12 to 41 are drawn up in accordance with the provision of the Deeds and give a true and fair view of the financial position of the Fund as at 31 March 2021 and of its financial performance, changes in equity and cash flows for the financial period ended 31 March 2021 in accordance with the Malaysian Financial Reporting Standards (“MFRS”) 134 “Interim Financial Reporting” and International Financial Reporting Standards (“IFRS”) 34 “Interim Financial Reporting”.
For and on behalf of the Manager, Hong Leong Asset Management Bhd (Company No.: 199401033034 (318717-M))
HOO SEE KHENG Chief Executive Officer/Executive Director
Kuala Lumpur 17 May 2021
10 HONG LEONG CONSUMER PRODUCTS SECTOR FUND TRUSTEE’S REPORT TO THE UNIT HOLDERS OF HONG LEONG CONSUMER PRODUCTS SECTOR FUND
We have acted as the Trustee for Hong Leong Consumer Products Sector Fund (the “Fund”) for the financial period ended 31 March 2021. To the best of our knowledge, for the financial period under review, Hong Leong Asset Management Bhd (the “Manager”) has operated and managed the Fund in accordance with the following:-
(a) limitations imposed on the investment powers of the Manager under the Deed(s), the Securities Commission’s Guidelines on Unit Trust Funds, the Capital Markets and Services Act 2007 and other applicable laws;
(b) valuation and pricing for the Fund is carried out in accordance with the Deed(s) of the Fund and any regulatory requirements; and
(c) creation and cancellation of units for the Fund are carried out in accordance with the Deed(s) of the Fund and any regulatory requirements.
We are of the view that the distribution made during the financial period ended 31 March 2021 by the Manager is not inconsistent with the objectives of the Fund.
For Deutsche Trustees Malaysia Berhad
Ng Hon Leong Gerard Ang Head, Trustee Operations Chief Executive Officer
Kuala Lumpur 17 May 2021
HONG LEONG CONSUMER PRODUCTS SECTOR FUND 11 CONDENSED STATEMENT OF COMPREHENSIVE INCOME (Unaudited) FOR THE FINANCIAL PERIOD ENDED 31 MARCH 2021
2021 2020 Note RM RM
INVESTMENT INCOME/(LOSS) Interest income from financial assets measured at amortised cost 30,407 141,257 Dividend income 724,362 899,319 Net gain/(loss) on financial assets at fair value through profit or loss (“FVTPL”) 8 6,628,702 (14,591,114) 7,383,471 (13,550,538)
EXPENDITURE Management fee 4 (525,222) (630,131) Trustee’s fee 5 (28,012) (33,607) Auditors’ remuneration (2,941) (2,950) Tax agent’s fee (1,296) (1,299) Transaction costs (79,394) (41,490) Other expenses (14,866) (15,402) (651,731) (724,879)
PROFIT/(LOSS) BEFORE TAXATION 6,731,740 (14,275,417) Taxation 6 - - PROFIT/(LOSS) AFTER TAXATION AND TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE FINANCIAL PERIOD 6,731,740 (14,275,417)
Profit/(loss) after taxation is made up as follows: Realised amount 1,582,022 (1,752,046) Unrealised amount 5,149,718 (12,523,371) 6,731,740 (14,275,417)
Distribution for the financial period: Net distribution 7 2,520,459 3,149,198 Net distribution per unit (sen) 7 0.9985 1.2481 Gross distribution per unit (sen) 7 1.0000 1.2500
The accompanying notes to the financial statements form an integral part of these unaudited condensed financial statements.
12 HONG LEONG CONSUMER PRODUCTS SECTOR FUND CONDENSED STATEMENT OF FINANCIAL POSITION (Unaudited) AS AT 31 MARCH 2021
31.03.2021 30.09.2020 Note RM RM
ASSETS Cash and cash equivalents 4,173,504 2,995,767 Amount due from the Manager -creation of units - 100 Dividends receivable 161,190 123,553 Financial assets at fair value through profit or loss (“FVTPL”) 8 68,904,192 65,201,968 Tax recoverable 7,591 7,591 TOTAL ASSETS 73,246,477 68,328,979
LIABILITIES Amount due to the Manager -cancellation of units 191,495 32,093 -management fee 92,724 84,522 -expenses 2,144 2,152 Amount due to the Trustee 9,337 4,508 Distribution payable - 6,216 Other payables and accruals 6,993 9,010 TOTAL LIABILITIES 302,693 138,501
NET ASSET VALUE OF THE FUND 72,943,784 68,190,478
EQUITY Unit holders’ capital 63,499,997 64,907,212 Retained earnings 9,443,787 3,283,266 NET ASSETS ATTRIBUTABLE TO UNIT HOLDERS 72,943,784 68,190,478
UNITS IN CIRCULATION (UNITS) 9 255,074,523 253,505,705
NET ASSET VALUE PER UNIT (RM) 0.2860 0.2690
The accompanying notes to the financial statements form an integral part of these unaudited condensed financial statements.
HONG LEONG CONSUMER PRODUCTS SECTOR FUND 13 CONDENSED STATEMENT OF CHANGES IN EQUITY (Unaudited) FOR THE FINANCIAL PERIOD ENDED 31 MARCH 2021
Unit holders’ Retained capital earnings Total Note RM RM RM
Balance as at 1 October 2020 64,907,212 3,283,266 68,190,478 Movement in net asset value: Creation of units from applications 4,445,469 - 4,445,469 Creation of units from distribution 2,469,695 - 2,469,695 Cancellation of units (6,373,139) - (6,373,139) Total comprehensive income for the financial period - 6,731,740 6,731,740 Distribution for the financial period 7 (1,949,240) (571,219) (2,520,459) Balance as at 31 March 2021 63,499,997 9,443,787 72,943,784
Balance as at 1 October 2019 71,190,130 15,887,996 87,078,126 Movement in net asset value: Creation of units from applications 4,531,628 - 4,531,628 Creation of units from distribution 3,026,732 - 3,026,732 Cancellation of units (9,183,265) - (9,183,265) Total comprehensive loss for the financial period - (14,275,417) (14,275,417) Distribution for the financial period 7 (2,459,763) (689,435) (3,149,198) Balance as at 31 March 2020 67,105,462 923,144 68,028,606
The accompanying notes to the financial statements form an integral part of these unaudited condensed financial statements.
14 HONG LEONG CONSUMER PRODUCTS SECTOR FUND CONDENSED STATEMENT OF CASH FLOWS (Unaudited) FOR THE FINANCIAL PERIOD ENDED 31 MARCH 2021
2021 2020 RM RM
CASH FLOWS FROM OPERATING ACTIVITIES Proceeds from sales of financial assets at FVTPL 13,909,171 8,328,755 Purchase of financial assets at FVTPL (11,062,087) (5,581,789) Interest income received from financial assets measured at amortised cost 30,407 141,257 Dividend income received 686,725 905,597 Management fee paid (517,020) (649,353) Trustee’s fee paid (23,183) (34,632) Payment for other fees and expenses (21,128) (20,297) Net cash generated from operating activities 3,002,885 3,089,538
CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from creation of units 4,445,569 4,835,176 Payments for cancellation of units (6,213,737) (9,144,401) Payment for distribution (56,980) (122,466) Net cash used in from financing activities (1,825,148) (4,431,691)
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 1,177,737 (1,342,153) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE FINANCIAL PERIOD 2,995,767 10,731,364 CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL PERIOD 4,173,504 9,389,211
The accompanying notes to the financial statements form an integral part of these unaudited condensed financial statements.
HONG LEONG CONSUMER PRODUCTS SECTOR FUND 15 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Unaudited) FOR THE FINANCIAL PERIOD ENDED 31 MARCH 2021
1. THE FUND, THE MANAGER AND THEIR PRINCIPAL ACTIVITIES
Hong Leong Consumer Products Sector Fund (“the Fund”) was constituted pursuant to the execution of a Deed dated 25 July 2000 and Supplemental Deeds dated 18 December 2000, 8 March 2004 and 30 April 2010 between the Manager, Hong Leong Asset Management Bhd and Universal Trustee (Malaysia) Berhad for the unit holders of the Fund. Universal Trustee (Malaysia) Berhad has been replaced with Deutsche Trustees Malaysia Berhad (“the Trustee”) effective 1 August 2013 and Supplemental Master Deeds were entered into between the Manager and the Trustee for the unit holders of the Fund on 30 May 2013 and 25 March 2015 to effect the change (“the Deeds”).
The Fund’s primary objective is to provide the Malaysian public with an affordable and flexible access into an investment portfolio that focuses solely on securities that are classified under the Bursa Malaysia Consumer Product sector. The Fund will aim to outperform the said sector’s benchmark index which is the Bursa Malaysia Consumer Product Index, while assuming a risk level that matches that of the said sector.
The Fund will invest into a diversified portfolio of equities involved in the consumer product sector. The consumer product sector comprises companies that produce, manufacture and distribute materials or components into new products for consumer use. These companies include but are not limitied to companies involved in the food, beverage, tobacco, household goods, fashion, apparel, footwear, textiles and automobiles industries. The Fund commenced operations on 29 August 2000 and will continue its operations until terminated as provided under Part 12 of the Deed.
The Manager of the Fund is Hong Leong Asset Management Bhd, a company incorporated in Malaysia. The principal activity of the Manager is the management of unit trust funds and private investment mandates. Its holding company is Hong Leong Capital Berhad, a company incorporated in Malaysia and listed on the Main Market of Bursa Malaysia Securities Berhad.
The financial statements were authorised for issue by the Manager on 17 May 2021.
16 HONG LEONG CONSUMER PRODUCTS SECTOR FUND 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the financial statements:
(a) Basis of preparation
The condensed financial statements are unaudited and have been prepared in accordance with the Malaysian Financial Reporting Standards (“MFRS”) 134 “Interim Financial Reporting” and International Financial Reporting Standards (“IFRS”) 34 “Interim Financial Reporting”.
The condensed financial statements should be read in conjunction with the audited financial statements of the Fund for the financial year ended 30 September 2020 which have been prepared in accordance with the provisions of the Malaysian Financial Reporting Standards (“MFRS”) and International Financial Reporting Standards (“IFRS”).
(i) Amendments to published standard and interpretations that are effective and relevant.
The Fund has applied the following amendments and interpretations for the first time for the financial period beginning 1 October 2020:
• Amendments to the definition of material (Amendments to MFRS 101 and MFRS 108) effective 1 January 2020.
The amendments clarify the definition of materiality and use a consistent definition throughout MFRSs and the Conceptual Framework for Financial Reporting.
HONG LEONG CONSUMER PRODUCTS SECTOR FUND 17 The definition of ‘material’ has been revised as “Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.”
The amendments also:
- clarify that an entity assess materiality in the context of the financial statements as a whole. - explain the concept of obscuring information in the new definition. Information is obscured if it have the effect similar as omitting or misstating of that information. For example, material transaction is scattered throughout the financial statements, dissimilar items are inappropriately aggregated, or material information is hidden by immaterial information. - clarify the meaning of ‘primary users of general purpose financial statements’ to whom those financial statements are directed, by defining them as ‘existing and potential investors, lenders and other creditors’ that must rely on general purpose financial statements for much of the financial information they need.
• The Conceptual Framework for Financial Reporting (“Framework”) effective 1 January 2020.
The Framework was revised with the primary purpose to assist the International Accounting Standards Board (“IASB”) to develop IFRS that are based on consistent concepts and enable preparers to develop consistent accounting policies where an issue is not addressed by an IFRS. The Framework is not an IFRS, and does not override any IFRSs.
18 HONG LEONG CONSUMER PRODUCTS SECTOR FUND Key changes include:
- Objective of general purpose financial reporting - clarification that the objective of financial reporting is to provide useful information to the users of financial statements for resource allocation decisions and assessment of management’s stewardship. - Qualitative characteristics of useful financial information - reinstatement of the concepts of prudence when making judgment of uncertain conditions and “substance over form” concept to ensure faithful representation of economic phenomenon. - Clarification on reporting entity for financial reporting - introduction of new definition of a reporting entity, which might be a legal entity or a portion of a legal entity. - Elements of financial statements - the definitions of an asset and a liability have been refined. Guidance in determining unit of account for assets and liabilities have been added, by considering the nature of executory contracts and substance of contracts. - Recognition and derecognition - the probability threshold for asset or liability recognition has been removed. New guidance on de-recognition of asset and liability have been added. - Measurement - explanation of factors to consider when selecting a measurement basis have been provided. - Presentation and disclosure - clarification that statement of comprehensive income is the primary source of information about an entity’s financial performance for a reporting period. In principle, recycling of income/ expense included in other comprehensive income to profit or loss is required if this results in more relevant information or a more faithful representation of profit or loss.
The adoption of the amendments to published standards and revised Framework did not have any impact on the current period or any prior period and is not likely to affect future periods.
HONG LEONG CONSUMER PRODUCTS SECTOR FUND 19 (ii) Standards, amendments and interpretations that have been issued but not yet effective and have not been early adopted.
A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 October 2020, and have not been early adopted in preparing these financial statements. None of these are expected to have a material effect on the financial statements of the Fund.
(b) Financial assets and financial liabilities
Classification
The Fund classifies 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 flows 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.
20 HONG LEONG CONSUMER PRODUCTS SECTOR FUND The Fund classifies cash and cash equivalents, amount due from the Manager and dividends receivable 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 amounts due to the Manager, amount due to the Trustee, distribution payable and other payables and accruals as financial liabilities measured at amortised cost.
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 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.
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 are derecognised when it is extinguished, i.e. when the obligation specified in the contract is discharged or cancelled or expired.
Unrealised gains or losses arising from changes in the fair value of the financial assets at fair value through profit or loss are presented in the statement of comprehensive income within net gain or loss on financial assets at fair value through profit or loss in the period which they arise.
HONG LEONG CONSUMER PRODUCTS SECTOR FUND 21 Dividend income from financial assets at fair value through profit or loss is recognised in the statement of comprehensive income as part of dividend income when the Fund’s right to receive payments is established.
Quoted investments are valued at the last done market prices quoted on 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 quoted investments, 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 quoted securities for a period exceeding 14 days, or such shorter period as agreed by the Trustee, then the quoted 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.
Deposits with licensed financial institutions are stated at cost plus accrued interest calculated on the effective interest rate method over the period from the date of placement to the date of maturity of the respective deposits, which is a close estimate of their fair value due to the short term nature of the deposits. Financial assets at amortised cost and other financial liabilities are subsequently carried at amortised cost using the effective interest rate method.
Impairment
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 closed 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.
22 HONG LEONG CONSUMER PRODUCTS SECTOR 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 there is no reasonable expectation of recovery. The assessment of no reasonable expectation of recovery is based on unavailability of obligor’s sources of income or assets to generate sufficient future cash flows to pay 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.
(c) Functional and presentation 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 functional and presentation currency.
HONG LEONG CONSUMER PRODUCTS SECTOR FUND 23 (d) Income recognition
Dividend income is recognised on the ex-dividend date when the Fund’s right to receive payment is established.
Interest income from deposits with licensed financial institutions and auto-sweep facility bank account are recognised on the effective interest rate method on an accrual basis.
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).
Realised gain or loss on disposal of quoted investments are accounted for as the difference between the net disposal proceeds and the carrying amount of quoted investments determined on a weighted average cost basis.
(e) Cash and cash equivalents
For the purpose of statement of cash flows, cash and cash equivalents comprise cash at banks and deposits held in highly liquid investments that are readily convertible to known amounts of cash with an original maturity of three months or lesser which are subject to an insignificant risk of changes in value.
(f) Amount due from/to brokers/dealers
Amount due from/to brokers/dealers represents receivables/ payables for investments sold/purchased that have been contracted for but not yet settled or delivered on the statement of financial position date respectively.
24 HONG LEONG CONSUMER PRODUCTS SECTOR FUND These amounts are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method, less provision for impairment for amount due from brokers/dealers. A provision for impairment of amount due from a broker/dealer is established when there is objective evidence that the Fund will not be able to collect all amounts due from the relevant broker/dealer. Significant financial difficulties of the broker/dealer, probability that the broker/dealer will enter bankruptcy or financial reorganisation, and default in payments are considered indicators that the amount due from brokers/dealers is impaired. Once a financial asset or a group of similar financial assets has been written down as a result of an impairment loss, interest income is recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.
(g) Taxation
Current tax expense is determined according to Malaysian tax laws at the prevailing tax rate based on the taxable profit earned during the financial period. Withholding taxes are not “income tax” in nature and are recognised and measured based on the requirements of MFRS 137. They are presented within other expenses line in the statement of comprehensive income.
(h) Distributions
A distribution to the Fund’s unit holders is accounted for as a deduction from realised reserve. A proposed distribution is recognised as a liability in the financial period in which it is approved by the Board of Directors of the Manager.
(i) Transaction costs
Transaction costs are costs incurred to acquire or dispose financial assets or liabilities at fair value through profit or loss. They include fees and commissions paid to agents, advisors and brokers/ dealers. Transaction costs, when incurred, are immediately recognised in the statement of comprehensive income as expenses.
HONG LEONG CONSUMER PRODUCTS SECTOR FUND 25 (j) 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 unit holder to a proportionate share of the Fund’s net asset 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 the units; and • the total expected cash flows from the units over its life are based substantially on the profit or loss and change in the net asset value of the Fund.
The outstanding units are carried at the redemption amount that is payable at the date of the statement of financial position 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 and 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.
(k) Fair value of financial instruments
Financial instruments comprise financial assets and financial liabilities. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The information presented herein represents the estimates of fair values as at the date of the statement of financial position.
The Fund’s financial assets and financial liabilities are measured on an ongoing basis at either fair value or at amortised cost based on the respective classification.
26 HONG LEONG CONSUMER PRODUCTS SECTOR FUND The following table analyses the financial assets and financial liabilities of the Fund in the statement of financial position as at the reporting date:
Financial Financial assets/ assets liabilities at at FVTPL amortised cost Total RM RM RM
31.03.2021 Financial assets Cash and cash equivalents - 4,173,504 4,173,504 Dividends receivable - 161,190 161,190 Financial assets at FVTPL (Note 8) 68,904,192 - 68,904,192 68,904,192 4,334,694 73,238,886
Financial liabilities Amount due to the Manager -cancellation of units - 191,495 191,495 -management fee - 92,724 92,724 -expenses - 2,144 2,144 Amount due to the Trustee - 9,337 9,337 Other payables and accruals - 6,993 6,993 - 302,693 302,693
30.09.2020 Financial assets Cash and cash equivalents - 2,995,767 2,995,767 Amount due from the Manager -creation of units - 100 100 Dividends receivable - 123,553 123,553 Financial assets at FVTPL (Note 8) 65,201,968 - 65,201,968 65,201,968 3,119,420 68,321,388
Financial liabilities Amount due to the Manager -cancellation of units - 32,093 32,093 -management fee - 84,522 84,522 -expenses - 2,152 2,152 Amount due to the Trustee - 4,508 4,508 Distribution payable - 6,216 6,216 Other payables and accruals - 9,010 9,010 - 138,501 138,501
All liabilities are financial liabilities which are carried at amortised cost.
HONG LEONG CONSUMER PRODUCTS SECTOR FUND 27 (l) 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 content of the estimates, certain key variables that are anticipated to have material impact 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 Securities Commission Malaysia’s Guidelines on Unit Trust Funds.
However, the Manager is of the opinion that there are no accounting policies which require significant judgment to be exercised.
3. FAIR VALUE ESTIMATION
The fair value of financial assets traded in active markets (such as trading securities) are based on quoted market prices at the close of trading on the reporting 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 most representative of the fair value.
28 HONG LEONG CONSUMER PRODUCTS SECTOR FUND A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occuring market transactions on an arm’s length 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 recent arm’s length 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.
For instruments for which there is no active market, the Fund may use internally developed models, which are usually based on valuation methods and techniques generally recognised as standard within the industry. Valuation models are used primarily to value unlisted equity, debt securities and other debt instruments for which market were or have been inactive during the financial period. Some of the inputs to these models may not be market observable and are therefore estimated based on assumptions.
The output of a model is always an estimate or approximation of a value that cannot be determined with certainty, and valuation techniques employed may not fully reflect all factors relevant to the positions the Fund holds. Valuations are therefore adjusted, where appropriate, to allow for additional factors including model risk, liquidity risk and counter party risk.
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 on-going basis.
HONG LEONG CONSUMER PRODUCTS SECTOR FUND 29 (i) Fair value hierarchy
The table below analyses financial instruments carried at fair value. The different levels have been defined as follows:
• Quoted prices (unadjusted) in active market for identical assets or liabilities (Level 1); • 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 2); and • Inputs for the asset and liability that are not based on observable market data (that is, unobservable inputs) (Level 3).
The level in the fair value hierarchy within which the fair value measurement is categorised in its entirely is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirely. For this purpose, the significance of an input is assessed against the fair value measurement in its entirely. If a fair value measurement uses observable inputs that requires 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 entirely 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.
30 HONG LEONG CONSUMER PRODUCTS SECTOR FUND The following table analyses within the fair value hierarchy of the Fund’s financial assets (by class) measured at fair value:
Level 1 Level 2 Level 3 Total RM RM RM RM
31.03.2021 Financial assets at FVTPL: - Quoted equity securities 68,904,192 - - 68,904,192
30.09.2020 Financial assets at FVTPL: - Quoted equity securities 65,201,968 - - 65,201,968
Investments whose values are based on quoted market prices in active markets, and are therefore classified within Level 1, include active listed equities. The Fund does not adjust the quoted prices for this instrument. The Fund’s policies on valuation of this financial asset are stated in Note 2(b).
(ii) The carrying values of financial assets (other than financial assets at FVTPL) and financial liabilities are a reasonable approximation of their fair values due to their short term nature.
4. MANAGEMENT FEE
In accordance with Division 13.1 of the Deed, the Manager is entitled to a management fee of up to 1.50% per annum calculated daily based on the net asset value of the Fund.
For the financial period ended 31 March 2021, the management fee is recognised at a rate of 1.50% (2020: 1.50%) per annum.
There will be no further liability to the Manager in respect of management fee other than the amount recognised above.
HONG LEONG CONSUMER PRODUCTS SECTOR FUND 31 5. TRUSTEE’S FEE
In accordance with Division 13.2 of the Deed, the Trustee is entitled to a fee not exceeding 0.08% per annum calculated daily based on the net asset value of the Fund.
For the financial period ended 31 March 2021, the Trustee’s fee is recognised at a rate of 0.08% (2020: 0.08%) per annum.
There will be no further liability to the Trustee in respect of Trustee’s fee other than the amount recognised above.
6. TAXATION
2021 2020 RM RM
Tax charge for the financial period: Current taxation - -
The numerical reconciliation between profit/(loss) before taxation multiplied by the Malaysian statutory income tax rate and tax expense of the Fund is as follows:
2021 2020 RM RM
Profit/(loss) before taxation 6,731,740 (14,275,417)
Taxation at Malaysian statutory rate of 24% (2020: 24%) 1,615,618 (3,426,100)
Tax effects of: (Investment income not subject to tax)/ investment loss disallowed from tax (1,772,033) 3,252,129 Expenses not deductible for tax purposes 27,036 18,864 Restriction on tax deductible expenses for unit trust fund 129,379 155,107 Taxation - -
32 HONG LEONG CONSUMER PRODUCTS SECTOR FUND 7. DISTRIBUTION
2021 2020 RM RM
Prior financial years’ realised income 571,219 689,435 Distribution equalisation 1,949,240 2,459,763 Net distributions amount 2,520,459 3,149,198
Date of Declaration Distribution on 19/21 January Net distribution per unit (sen) 0.9985 1.2481 Gross distribution per unit (sen) 1.0000 1.2500
Net distribution above is sourced from prior financial years’ realised income. Gross distribution is derived using total income less total expenses.
Gross distribution per unit is derived from net realised income less expenses divided by units in circulation, while net distribution per unit is derived from net realised income less expenses and taxation divided by units in circulation.
Distribution equalisation represents the average amount of distributable income included in the creation and cancellation prices of units. It is computed as at each date of creation and cancellation of units. For the purpose of determining amount available for distribution, distribution equalisation is included in the computation of distribution available for unit holders.
The above distribution has been proposed before taking into account the unrealised gain of RM5,149,718 (2020: unrealised loss of RM12,523,371) which is carried forward to the next financial period.
HONG LEONG CONSUMER PRODUCTS SECTOR FUND 33 8. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (“FVTPL”)
31.03.2021 30.09.2020 RM RM
Financial assets at FVTPL: Quoted equity securities 68,904,192 65,201,968
2021 2020 RM RM
Net gain/(loss) on financial assets at FVTPL: Realised gain/(loss) on disposals 1,478,984 (2,067,743) Changes in unrealised fair values 5,149,718 (12,523,371) 6,628,702 (14,591,114)
Financial assets at FVTPL as at 31 March 2021 are as detailed below:
Percentage Aggregate Fair of net asset Quantity cost value value units RM RM %
QUOTED EQUITY SECURITIES
Consumer Products & Services Bermaz Auto Berhad 3,000,000 6,950,274 4,320,000 5.92 Carlsberg Brewery Malaysia Berhad 240,000 3,886,306 5,726,400 7.85 Fraser & Neave Holdings Bhd 135,000 3,412,308 4,050,000 5.55 Genting Berhad 1,170,000 7,388,529 5,885,100 8.07 Guan Chong Berhad 1,200,000 4,122,120 3,768,000 5.17 Heineken Malaysia Berhad 250,000 3,986,407 6,450,000 8.84 Hong Leong Industries Berhad 220,000 1,176,623 2,065,800 2.83 Johore Tin Berhad 1,350,000 2,520,000 2,268,000 3.11 Kawan Food Berhad 800,000 1,492,865 1,488,000 2.04 Magni-Tech Industries Berhad 698,666 1,186,897 1,627,892 2.23 MBM Resources Berhad 700,000 2,802,519 2,401,000 3.29 MR D.I.Y Group (M) Berhad 1,100,000 4,344,570 4,532,000 6.21 Nestle (Malaysia) Berhad 45,000 2,897,642 6,075,000 8.33 Panasonic Manufacturing Malaysia Berhad 147,500 3,315,093 4,572,500 6.27 Poh Kong Holdings Berhad 3,600,000 3,442,320 2,808,000 3.85 PPB Group Berhad 252,000 3,402,033 4,662,000 6.39 QL Resources Berhad 825,000 2,893,854 4,999,500 6.86
34 HONG LEONG CONSUMER PRODUCTS SECTOR FUND Percentage Aggregate Fair of net asset Quantity cost value value units RM RM %
Spritzer Bhd 602,500 1,062,735 1,205,000 1.65
TOTAL QUOTED EQUITY SECURITIES 16,335,666 60,283,095 68,904,192 94.46
UNREALISED GAIN ON FINANCIAL ASSETS AT FVTPL 8,621,097
TOTAL FAIR VALUE OF FINANCIAL ASSETS AT FVTPL 68,904,192
Financial assets at FVTPL as at 30 September 2020 are as detailed below:
Percentage Aggregate Fair of net asset Quantity cost value value units RM RM %
QUOTED EQUITY SECURITIES
Consumer Products & Services Bermaz Auto Berhad 3,000,000 6,950,274 4,140,000 6.07 Carlsberg Brewery Malaysia Berhad 248,500 4,023,946 5,143,950 7.54 Formosa Prosonic Industries Berhad 2,200,000 4,052,960 3,388,000 4.97 Fraser & Neave Holdings Bhd 148,500 3,753,538 4,766,850 6.99 Genting Berhad 1,170,000 7,388,529 3,720,600 5.46 Guan Chong Berhad 1,200,000 4,122,120 3,960,000 5.81 Heineken Malaysia Berhad 276,300 4,405,777 5,708,358 8.37 Hong Leong Industries Berhad 195,500 935,053 1,464,295 2.15 Khind Holdings Berhad 268,000 587,646 589,600 0.86 Magni-Tech Industries Berhad 698,666 1,186,897 1,634,879 2.40 MBM Resources Berhad 900,000 3,691,010 2,853,000 4.18 Nestle (Malaysia) Berhad 47,900 3,084,379 6,773,060 9.93 New Hoong Fatt Holdings Berhad 117,500 427,692 230,300 0.34 Oriental Holdings Berhad 305,300 2,359,174 1,578,401 2.32 Panasonic Manufacturing Malaysia Berhad 147,500 3,315,094 4,191,950 6.15 Poh Kong Holdings Berhad 4,000,000 3,824,800 3,240,000 4.75 PPB Group Berhad 252,000 3,402,033 4,788,000 7.02 QL Resources Berhad 600,000 3,156,932 5,892,000 8.64
HONG LEONG CONSUMER PRODUCTS SECTOR FUND 35 Percentage Aggregate Fair of net asset Quantity cost value value units RM RM %
Spritzer Bhd 602,500 1,062,735 1,138,725 1.67
TOTAL QUOTED EQUITY SECURITIES 16,378,166 61,730,589 65,201,968 95.62
UNREALISED GAIN ON FINANCIAL ASSETS AT FVTPL 3,471,379
TOTAL FAIR VALUE OF FINANCIAL ASSETS AT FVTPL 65,201,968
9. UNITS IN CIRCULATION
01.10.2020 01.10.2019 to 31.03.2021 to 30.09.2020 No. of units No. of units
At the beginning of the financial period/year 253,505,705 256,665,893 Add: Creation of units during the financial period/year - Arising from applications 15,509,467 17,339,612 - Arising from distribution 9,028,787 21,698,561 Less: Cancellation of units during the financial period/year (22,969,436) (42,198,361) At the end of the financial period/year 255,074,523 253,505,705
36 HONG LEONG CONSUMER PRODUCTS SECTOR FUND 10. MANAGEMENT EXPENSE RATIO (“MER”)
2021 2020 % %
MER (annualised) 1.62 1.62
Management expense ratio includes management fee, Trustee’s fee, auditors’ remuneration, tax agent’s fee and other expenses for the financial period divided by the Fund’s average net asset value calculated on a daily basis and is calculated as follows:
MER = (A+B+C+D+E) X 100 F
Where; A = Management fee B = Trustee’s fee C = Auditors’ remuneration D = Tax agent’s fee E = Other expenses excluding Sales and Service Tax (“SST”) on transaction costs 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 RM70,222,007 (2020: RM84,004,948).
HONG LEONG CONSUMER PRODUCTS SECTOR FUND 37 11. PORTFOLIO TURNOVER RATIO (“PTR”)
2021 2020 Times Times
PTR 0.17 0.09
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 = RM11,027,650 (2020: RM5,162,347) total disposals for the financial period = RM12,475,144 (2020: RM10,422,334)
12. UNITS HELD BY THE MANAGER AND RELATED PARTIES TRANSACTIONS AND BALANCES
The related parties and their relationships with the Fund are as follows:
Related parties Relationships Hong Leong Asset Management Bhd The Manager Hong Leong Islamic Asset Management Sdn Bhd Subsidiary of the Manager Hong Leong Capital Berhad Holding company of the Manager Hong Leong Financial Group Ultimate holding company of Berhad (“HLFG”) the Manager Subsidiaries and associates of Subsidiaries and associate HLFG as disclosed in its companies of the ultimate financial statements holding company of the Manager
No units were held by the Manager and parties related to the Manager as at 31 March 2021 and 30 September 2020.
38 HONG LEONG CONSUMER PRODUCTS SECTOR FUND In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are other related party transactions and balances. The Manager is of the opinion that all transactions with the related companies have been entered into at agreed terms between the related parties.
31.03.2021 30.09.2020 RM RM
Related party balances Cash at bank: - Hong Leong Bank Berhad 4,163,724 2,925,193
2021 2020 RM RM
Related party transactions Interest income from auto-sweep facility bank account: - Hong Leong Bank Berhad 30,407 141,257
Purchase of quoted equity securities: - Hong Leong Investment Bank Berhad 4,455,188 2,961,205
Disposal of quoted equity securities: - Hong Leong Investment Bank Berhad 3,077,116 560,690
HONG LEONG CONSUMER PRODUCTS SECTOR FUND 39 13. TRANSACTIONS WITH BROKERS/DEALERS
Detail of transactions with brokers/dealers are as follows:
Percentage of total Values Percentage Brokerage brokerage of trade of total trade fees fees RM % RM %
2021 Hong Leong Investment Bank Berhad* 7,532,304 30.16 18,820 30.16 Nomura Securities Malaysia Sdn Bhd 4,402,238 17.63 11,007 17.64 RHB Investment Bank Berhad 3,310,945 13.26 8,297 13.30 UOB Kay Hian Securities (M) Sdn Bhd 2,426,540 9.72 6,077 9.74 Affin Hwang Investment Bank Berhad 1,720,970 6.89 4,290 6.88 CLSA Securities Malaysia Sdn Bhd 1,593,744 6.38 3,996 6.41 Credit Suisse Securities (Malaysia) Sdn Bhd 1,519,740 6.09 3,793 6.08 Macquaire Capital Securities (Malaysia) Sdn Bhd 532,604 2.13 1,337 2.14 Alliance Investment Bank Berhad 418,778 1.68 1,051 1.68 Public Investment Bank Berhad 396,823 1.59 994 1.59 Others 1,116,573 4.47 2,730 4.38 24,971,259 100.00 62,392 100.00
40 HONG LEONG CONSUMER PRODUCTS SECTOR FUND Percentage of total Values Percentage Brokerage brokerage of trade of total trade fees fees RM % RM %
2020 Hong Leong Investment Bank Berhad* 3,521,895 26.07 8,786 26.34 Credit Suisse Securities (Malaysia) Sdn Bhd 1,859,627 13.77 4,664 13.99 Citigroup Global Markets Malaysia Sdn Bhd 1,763,717 13.06 3,980 11.94 CLSA Securities Malaysia Sdn Bhd 1,348,854 9.99 3,380 10.14 Public Investment Bank Berhad 1,277,174 9.45 3,200 9.59 JPMorgan Securities (Malaysia) Sdn Bhd 1,132,213 8.38 2,828 8.48 Affin Hwang Investment Bank Berhad 912,274 6.75 2,279 6.83 RHB Investment Bank Berhad 588,554 4.36 1,468 4.40 UOB Kay Hian Securities (M) Sdn Bhd 327,977 2.43 823 2.47 Maybank Investment Bank Berhad 325,154 2.41 815 2.44 Others 449,318 3.33 1,127 3.38 13,506,757 100.00 33,350 100.00
* Transactions with brokers/dealers related to the Manager.
The Manager is of the opinion that all transactions with the related companies have been entered into at agreed terms between the related parties.
14. SIGNIFICANT EVENT
The Manager is monitoring closely the worsening of the macro-economic outlook as a result of Covid-19, both domestically and globally, and will be managing the portfolio to achieve the Fund’s objective. At this stage, the impact on the Fund’s performance is limited.
HONG LEONG CONSUMER PRODUCTS SECTOR FUND 41 Performance Data
Financial Period 30/09/20– 31/03/21 %
A (i) Portfolio Compositions: Consumer Products & Services 94.46 Property – Deposits and Cash Equivalents 5.54 (ii) Total Net Asset Value (ex-distribution) RM72,943,784
(iii) Net Asset Value Per Unit (ex-distribution) RM0.2860 Units in Circulation (ex-distribution) 255,074,523 (iv) Highest/Lowest NAV Per Unit Highest NAV Per Unit RM0.2911 (ex-distribution) Lowest NAV Per Unit RM0.2516
(v) Total Return of the Fund* 10.20% - Capital Growth 6.32% - Income Distribution 3.88%
(vi) Distribution Per Unit Additional Units – Distribution (Gross) 1.0 sen/unit Distribution (Net) 0.9985 sen/unit Distribution Date 19/01/2021 Additional Units – Distribution (Gross) – Distribution (Net) – Distribution Date – Additional Units – Distribution (Gross) – Distribution (Net) – Distribution Date – (vii) Management Expense Ratio (MER) 1.62%
(viii) Portfolio Turnover Ratio (PTR) (times) 0.17#
B. Average Total Return, NAV Per Unit-to-NAV Per Unit basis (as at 31/03/2021)* (i) One year 15.36% (ii) Three years -0.18% (iii) Five years 5.13% (iv) Ten years 9.94%
* Source: Lipper For Investment Management (Returns are calculated after adjusting for distributions and/or additional units, if any)
# The PTR decreased by 0.03 times (15.00%) as compared to 0.20 times for the financial year ended 30 September 2020 mainly due to lower level of rebalancing activities undertaken by the Fund and increased by 0.08 times (88.89%) as compared to 0.09 times for the financial period from 1 October 2019 to 31 March 2020 mainly due to higher level of rebalancing activities undertaken by the Fund.
42 HONG LEONG CONSUMER PRODUCTS SECTOR FUND Financial Year Financial Year Financial Year Financial Year Financial Year 30/09/19– 30/09/18– 30/09/17– 30/09/16– 30/09/15– 30/09/20 30/09/19 30/09/18 30/09/17 30/09/16 % % % % %
95.62 87.73 75.03 81.67 71.60 – – 1.73 – – 4.38 12.27 23.24 18.33 28.40 RM68,190,478 RM87,078,126 RM79,704,294 RM65,009,527 RM57,142,296 RM0.2690 RM0.3393 RM0.3775 RM0.3794 RM0.4511 253,505,705 256,665,893 211,120,141 171,373,222 126,669,383 RM0.3479 RM0.3774 RM0.4090 RM0.4523 RM0.4589 RM0.2417 RM0.3385 RM0.3671 RM0.3688 RM0.4129 -13.36% 0.55% 13.23% 5.74% 21.01% -20.72% -10.12% -0.50% -15.89% 2.85% 7.36% 10.67% 13.73% 21.63% 18.16% – – – – – 1.25 sen/unit 2.5 sen/unit 2.5 sen/unit 3.5 sen/unit 3.5 sen/unit 1.2481 sen/unit 2.4958 sen/unit 2.4928 sen/unit 3.4868 sen/unit 3.4841 sen/unit 21/01/2020 23/01/2019 16/01/2018 18/10/2016 20/10/2015 – - – – – 1.5 sen/unit 1.5 sen/unit 2.5 sen/unit 3.22 sen/unit 3.5 sen/unit 1.4977 sen/unit 1.4979 sen/unit 2.4956 sen/unit 3.2090 sen/unit 3.4840 sen/unit 21/07/2020 16/07/2019 17/07/2018 18/01/2017 19/04/2016 – – – – – – – – 2.5 sen/unit – – – – 2.4931 sen/unit – – – – 18/07/2017 – 1.63% 1.62% 1.69% 1.74% 1.73% 0.20 0.24 0.30 0.26 0.23
HONG LEONG CONSUMER PRODUCTS SECTOR FUND 43 Corporate Information
Manager Hong Leong Asset Management Bhd [199401033034 (318717-M)]
Registered Office Level 30, Menara Hong Leong No. 6, Jalan Damanlela Bukit Damansara 50490 Kuala Lumpur
Business Office Level 18, Block B, Plaza Zurich No. 12, Jalan Gelenggang Bukit Damansara 50490 Kuala Lumpur
Board of Directors Mr. Chew Seong Aun Mr. Hoo See Kheng Dato’ Abdul Majit Bin Ahmad Khan Tunku Dato’ Mahmood Fawzy Bin Tunku Muhiyiddin
Executive Director / Chief Executive Officer Mr. Hoo See Kheng
Trustee Deutsche Trustees Malaysia Berhad [200701005591 (763590-H)]
Agents Hong Leong Bank Berhad (97141-X) HSBC Bank (Malaysia) Berhad (127776-V) OCBC Bank (Malaysia) Berhad (295400-W) Standard Chartered Bank Malaysia Berhad (115793-P) CIMB Private Banking (18417-M) United Overseas Bank (Malaysia) Berhad (271809-K) Affin Bank Berhad (25046-T) Registered Independent Tied Agents with FiMM
44 HONG LEONG CONSUMER PRODUCTS SECTOR FUND Corporate Directory
Head Office Level 18, Block B, Plaza Zurich No. 12, Jalan Gelenggang Bukit Damansara 50490 Kuala Lumpur Tel: 03-2081 8600 Fax: 03-2081 8500 Website: www.hlam.com.my E-mail: [email protected]
Pulau Pinang No. 441-1-3 Pulau Tikus Plaza, Jalan Burmah 10350 Pulau Tikus, Pulau Pinang Tel: 04-2288 112, 04-2289 112 Fax: 04-2283 112
Ipoh 2nd Floor, Lot 3, Persiaran Greentown 4 Greentown Business Centre 30450 Ipoh, Perak Tel: 05-2558 388, 05-2559 388, 05-2534 388 Fax: 05-2558 389
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46 HONG LEONG CONSUMER PRODUCTS SECTOR FUND Hong Leong Asset Management Bhd (318717-M) www.hlam.com.my