Reaching out to you

Hong Leong Growth Fund

Interim Report 2020 31 December 2020 Unaudited Hong Leong Growth 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 16-49 Performance Data 50-51 Corporate Information 52 Corporate Directory 53 Manager’s Review and Report

I. FUND INFORMATION

Fund Name Hong Leong Growth Fund

Fund Category Equity

Fund Type Growth

Investment Objective To provide Unitholders with an attractive* level of regular income** and capital gain on the value of Units at an acceptable risk.

Benchmark FTSE Bursa KLCI

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 2,157 5,622,532.17 5,001 to 10,000 1,202 8,851,695.92 10,001 to 50,000 2,433 55,111,047.38 50,001 to 500,000 682 74,214,395.43 500,001 and above 14 106,941,714.82

Notes: * Please take note that the Fund aims to provide sustainable risk-adjusted returns in the form of capital growth and income in accordance with the performance benchmark and distribution policy of the Fund, although this is not guaranteed. ** The Fund’s main focus is on capital growth and to a lesser extent, income. Income may be distributed in the form of cash and/or units. *** Long-Term refers to a period of above 5 years.

HONG LEONG GROWTH FUND 1 II. FUND PERFORMANCE

Chart 1: Performance of the Fund versus the benchmark covering the last five-year financial period

70 60 50 40 30 20 10

Percentage Growth Percentage 0 -10 -20 -30 31/12/2015 31/12/2016 31/12/2017 31/12/2018 31/12/2019 31/12/2020

From 31/12/2015 To 31/12/2020

Hong Leong Growth FTSE Bursa Malaysia Fund (HLGF) 65.27 KLCI -3.86

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 HLGF 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 GROWTH FUND Performance Review

This Interim Report covers the six-month financial period from 1 July 2020 to 31 December 2020.

The Fund posted a return of 21.74% in the past six months while its benchmark the FTSE Bursa Malaysia KLCI Index registered a return of 8.41%. During the financial period under review, the Fund had distributed an income distribution of 8.00 sen per unit to its Unitholders on 23 July 2020. Prior to the income distribution, the cum-distribution net asset value (NAV) per unit of the Fund was RM0.8091 while the ex-distribution NAV per unit was RM0.7299. 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 December 2020, the Fund registered a return of 65.27% compared to the benchmark’s return of -3.86% while distributing a total gross income of 36.44 sen per unit.

Table 1: Performance of the Fund for the following periods as at 31 December 2020 (Source: Lipper For Investment Management)

30/09/20– 30/06/20– 31/12/19– 31/12/17– 31/12/15– 31/12/10– 08/09/95– 31/12/20 31/12/20 31/12/20 31/12/20 31/12/20 31/12/20 31/12/20 Since 3 Months 6 Months 1 Year 3 Years 5 Years 10 Years Launch HLGF (%) 14.98 21.74 22.88 33.26 65.27 113.32 390.28 Benchmark (%) 8.13 8.41 2.42 -9.44 -3.86 7.13 65.56

HONG LEONG GROWTH FUND 3 Table 2: Return of the Fund based on NAV Per Unit-to-NAV Per Unit basis for the period 30 June 2020 to 31 December 2020 (Source: Lipper For Investment Management)

31-Dec-20 30-Jun-20 Return (%) NAV Per Unit RM0.7998 RM0.7290 21.74# Benchmark 1,627. 21 1,500.97 8.41 vs Benchmark (%) - - 13.33 # Return is calculated after adjusting for income distribution of 8.00 sen per unit on 23/07/2020.

Table 3: Financial Highlights The Net Asset Value attributable to Unitholders is represented by:

31-Dec-20 30-Jun-20 Change (RM) (RM) (%)

Unitholders’ Capital 99,119,123 83,922,663 18.11 Retained Earnings 101,424,785 82,585,205 22.81 Net Asset Value 200,543,908 166,507,868 20.44

Units in Circulation 250,741,386 228,410,473 9.78

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 30/06/20– 30/06/19– 30/06/18– 30/06/17– 31/12/20 30/06/20 30/06/19 30/06/18 Highest NAV Per Unit (RM) 0.8091 0.7666 0.7908 0.8395 Lowest NAV Per Unit (RM) 0.6805 0.4323 0.6236 0.7314 Capital Growth (%) 9.71 -1.13 -3.29 -3.42 Income Distribution (%) 12.03 10.16 7.93 7.74 Total Return (%) 21.74 9.03 4.64 4.32

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 HLGF reinvested.

4 HONG LEONG GROWTH FUND Table 5: Average Total Return of the Fund

31/12/19– 31/12/17– 31/12/15– 31/12/20 31/12/20 31/12/20 1 Year 3 Years 5 Years Average Total Return (%) 22.88 11.09 13.05 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 HLGF reinvested.

Table 6: Annual Total Return of the Fund

Financial Year 30/06/19– 30/06/18– 30/06/17– 30/06/16– 30/06/15– 30/06/20 30/06/19 30/06/18 30/06/17 30/06/16 Annual Total Return (%) 9.03 4.64 4.32 18.10 -3.75 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 HLGF reinvested.

III. INVESTMENT PORTFOLIO

Chart 2: Asset Allocation - July 2020 to December 2020

Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20

Equities

HONG LEONG GROWTH FUND 5 Chart 3: Sector Allocation as at 31 December 2020

Deposits & Cash Health Care Equivalents 0.37% Plantation 4.45% 2.87% Utilities 3.20% Industrial Products & Services Telecommunications 41.73% & Media 5.06%

Energy 6.11%

Consumer Products & Services 17.12% Technology 19.09%

Chart 4: Geographical Allocation as at 31 December 2020

Deposits & Cash Equivalents 4.45% Hong Kong 22.12%

Malaysia 73.43%

Strategies employed by the Fund during the period under review

During the period under review, the Fund was well invested in equities and was able to benefit from the equities market recovery following a series of positive vaccine news flow at the end of the 2020. In particular, the Fund maintained its exposure in the export sector and oil & gas sector. These sectors are expected to benefit should the pandemic situation improve.

The Fund’s focus remains on fundamentally resilient companies with a stable earnings track record and good management.

6 HONG LEONG GROWTH FUND We maintain our positive view on the Malaysian equities outlook as we expect the recovery in the global economy to have a positive impact on the local economy as well.

As of 31 December 2020, the Fund’s top-three holdings are Press Metal Aluminium Holdings Berhad - Malaysia (10.90%), Chemicals Group Berhad - Malaysia (7.45%) and Bumi Armada Berhad - Malaysia (6.11%).

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 3rd SMP, the MP, the 1st SMP and the 2nd 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.

IV. MARKET REVIEW

During the period under review, the MSCI AC Asia Pacific ex Japan Index rose 29.0%. The best performing markets were India and Korea while the laggards were Thailand and Malaysia. In the local market, the FTSE Bursa Malaysia KLCI rose 8.4%. Small caps outperformed as the FTSE Bursa Malaysia Small Cap Index rose 31.3%

HONG LEONG GROWTH FUND 7 It was a good third quarter in 2020 for global equities despite the pace of global COVID-19 infections not showing any signs of tapering. Global corporate results were generally better than expected as it appeared that investors have underestimated the impact of fiscal stimulus on the global economy. Sentiment was also buoyed by the progress made in the development of a potential vaccine.

The fourth quarter of 2020 had a rocky start as the resurgence of COVID-19 in Europe and the United States (US) started to accelerate at a worrying pace. There were also concerns about the possibility of a contentious US election. However, all the concerns quickly dissipated in November following a slew of positive news on the COVID-19 vaccine and a convincing US election results. Despite infection rates hitting new highs in various countries around the world, investors appeared to be in a hurry to deploy cash into equities with the assumption that the pandemic is likely to be successfully contained as the vaccines are being rolled out globally.

The performance of the local bourse was more subdued in the third quarter of 2020 compared to regional peers. Some of the developments that weigh on the local market sentiment were the Sabah state election, profit taking in the glove sector and some concerns about the economy post loan moratorium.

The local market ended higher during the fourth quarter of 2020 along with other regional markets. Risk-on sentiment from the positive vaccine development spilled over to the local market as foreign investors started taking an interest in emerging market laggards. Investors’ sentiment also received a boost as the 2021 Budget was successfully passed towards the end of the year.

8 HONG LEONG GROWTH FUND V. FUTURE PROSPECTS AND PROPOSED STRATEGIES

It appears that the worst is over for the global economy. The pace of the global economic recovery is very much dependent on the success of the global fight against the COVID-19 pandemic. As the virus outbreak has yet to be successfully contained, we expect the global economic recovery to be gradual. The level of success against the virus also appears to vary among different countries and hence the economic recovery is expected to be uneven and likely to follow a highly fluctuating trajectory. Despite near-term uncertainty, we are confident that the global economic growth will not be derailed over the long term due to low interest rates and substantial government fiscal stimuli.

We expect investor sentiment in the local market to improve along with the economy. Volatility is expected to persist as investors start to weigh the impact of the COVID-19 pandemic on corporate earnings. The local political scene has also grown noticeably more dynamic. However, apart from some short spikes of volatility, we do not expect political developments to have a structural long-term influence on overall market performance as investors appear to have grown accustomed to the current political environment. We would take the opportunity to accumulate should stocks decline to attractive valuations.

We reiterate our preference for well-managed companies. We continue to be invested in sectors that may benefit from the expected recovery in economic activity such as technology, oil & gas and selected export stocks.

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 GROWTH 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 49 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 December 2020 and of its financial performance, changes in equity and cash flows for the financial period ended 31 December 2020 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 15 February 2021

10 HONG LEONG GROWTH FUND TRUSTEE’S REPORT TO THE UNIT HOLDERS OF HONG LEONG GROWTH FUND

We have acted as the Trustee for Hong Leong Growth Fund (the “Fund”) for the financial period ended 31 December 2020. 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 December 2020 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 15 February 2021

HONG LEONG GROWTH FUND 11 CONDENSED STATEMENT OF COMPREHENSIVE INCOME (Unaudited) FOR THE FINANCIAL PERIOD ENDED 31 DECEMBER 2020

2020 2019 Note RM RM

INVESTMENT INCOME Interest income from financial assets measured at amortised cost 4 59,445 78,491 Dividend income 1,991,897 1,908,025 Net gain on derivatives 9 1,029,734 464,326 Net gain on financial assets at fair value through profit or loss (“FVTPL”) 10 37,429,330 12,398,200 Net foreign currency exchange loss (343,931) (99,945) 40,166,475 14,749,097

EXPENDITURE Management fee 5 (1,423,082) (1,222,076) Trustee’s fee 6 (56,923) (48,883) Auditors’ remuneration (4,891) (4,876) Tax agent’s fee (1,660) (1,306) Custodian fees (9,465) (6,906) Transaction costs (1,670,623) (1,045,625) Other expenses (100,914) (76,961) (3,267,558) (2,406,633)

PROFIT BEFORE TAXATION 36,898,917 12,342,464 Taxation 7 - - PROFIT AFTER TAXATION AND TOTAL COMPREHENSIVE INCOME FOR THE FINANCIAL PERIOD 36,898,917 12,342,464

Profit after taxation is made up as follows: Realised amount 11,371,684 12,634,730 Unrealised amount 25,527,233 (292,266) 36,898,917 12,342,464

Distribution for the financial period: Net distribution 8 18,059,337 15,043,965 Net distribution per unit (sen) 8 7.9174 6.8993 Gross distribution per unit (sen) 8 8.0000 7.0000

The accompanying notes to the financial statements form an integral part of these unaudited condensed financial statements.

12 HONG LEONG GROWTH FUND CONDENSED STATEMENT OF FINANCIAL POSITION (Unaudited) AS AT 31 DECEMBER 2020

31.12.2020 30.06.2020 Note RM RM

ASSETS Cash and cash equivalents 7,075,890 13,901,140 Amount due from brokers/dealers 1,389,956 14,188,314 Amount due from the Manager -creation of units 101,829 875 Derivatives 9 172,765 - Dividends receivable 497,157 625,123 Financial assets at fair value through profit or loss (“FVTPL”) 10 191,611,495 153,833,830 TOTAL ASSETS 200,849,092 182,549,282

LIABILITIES Amount due to brokers/dealers - 15,745,913 Amount due to the Manager -cancellation of units 11,354 21,631 -management fee 251,963 206,758 -expenses - 11 Amount due to the Trustee 10,079 8,270 Derivatives 9 - 33,392 Distribution payable 20,690 6,731 Other payables and accruals 11,098 18,708 TOTAL LIABILITIES 305,184 16,041,414

NET ASSET VALUE OF THE FUND 200,543,908 166,507,868

EQUITY Unit holders’ capital 99,119,123 83,922,663 Retained earnings 101,424,785 82,585,205 NET ASSETS ATTRIBUTABLE TO UNIT HOLDERS 200,543,908 166,507,868

UNITS IN CIRCULATION (UNITS) 11 250,741,386 228,410,473

NET ASSET VALUE PER UNIT (RM) 0.7998 0.7290

The accompanying notes to the financial statements form an integral part of these unaudited condensed financial statements.

HONG LEONG GROWTH FUND 13 CONDENSED STATEMENT OF CHANGES IN EQUITY (Unaudited) FOR THE FINANCIAL PERIOD ENDED 31 DECEMBER 2020

Unit holders’ Retained capital earnings Total Note RM RM RM

Balance as at 1 July 2020 83,922,663 82,585,205 166,507,868 Movement in net asset value: Creation of units from applications 29,648,924 - 29,648,924 Creation of units from distribution 17,221,267 - 17,221,267 Cancellation of units (31,673,731) - (31,673,731) Total comprehensive income for the financial period - 36,898,917 36,898,917 Distribution for the financial period 8 - (18,059,337) (18,059,337) Balance as at 31 December 2020 99,119,123 101,424,785 200,543,908

Balance as at 1 July 2019 76,407,066 84,652,356 161,059,422 Movement in net asset value: Creation of units from applications 3,911,453 - 3,911,453 Creation of units from distribution 14,390,470 - 14,390,470 Cancellation of units (9,845,556) - (9,845,556) Total comprehensive income for the financial period - 12,342,464 12,342,464 Distribution for the financial period 8 - (15,043,965) (15,043,965) Balance as at 31 December 2019 84,863,433 81,950,855 166,814,288

The accompanying notes to the financial statements form an integral part of these unaudited condensed financial statements.

14 HONG LEONG GROWTH FUND CONDENSED STATEMENT OF CASH FLOWS (Unaudited) FOR THE FINANCIAL PERIOD ENDED 31 DECEMBER 2020

2020 2019 RM RM

CASH FLOWS FROM OPERATING ACTIVITIES Proceeds from sale of financial assets at FVTPL 296,529,617 178,972,438 Purchase of financial assets at FVTPL (301,489,376) (175,091,529) Realised gain on derivatives 823,578 47,406 Realised foreign exchange differences arising from operating activities (305,283) 17,711 Interest income received from financial assets measured at amortised cost 59,444 78,491 Dividend income received 2,111,523 2,446,083 Management fee paid (1,377,877) (1,207,490) Trustee’s fee paid (55,115) (48,299) Payment for other fees and expenses (124,551) (87,471) Net cash (used in)/generated from operating activities (3,828,040) 5,127,340

CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from creation of units 29,547,971 4,292,421 Payments for cancellation of units (31,684,008) (9,877,059) Payments for distribution (824,111) (646,436) Net cash used in financing activities (2,960,148) (6,231,074)

NET DECREASE IN CASH AND CASH EQUIVALENTS (6,788,188) (1,103,734) EFFECTS OF FOREIGN EXCHANGE RATE CHANGES (37,062) (122,287) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE FINANCIAL PERIOD 13,901,140 14,741,869 CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL PERIOD 7,075,890 13,515,848

The accompanying notes to the financial statements form an integral part of these unaudited condensed financial statements.

HONG LEONG GROWTH FUND 15 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Unaudited) FOR THE FINANCIAL PERIOD ENDED 31 DECEMBER 2020

1. THE FUND, THE MANAGER AND THEIR PRINCIPAL ACTIVITIES

Hong Leong Growth Fund (“the Fund”) was constituted pursuant to the execution of a Deed dated 23 August 1995 and Supplemental Deeds dated 12 November 1998, 11 April 2001, 6 October 2003, 2 June 2009 and 30 April 2010 between the Manager, Hong Leong Asset Management Bhd and PB Trustee Services Berhad for the unit holders of the Fund. PB Trustee Services Berhad has been replaced with Deutsche Trustees Malaysia Berhad (“the Trustee”) effective 1 September 2012 and Supplemental Master Deeds were entered into between the Manager and the Trustee for the unit holders of the Fund on 27 July 2012, 25 March 2015, 28 November 2019 and 7 February 2020 to effect the change (“the Deeds”).

The Fund aims to provide unit holders with an attractive level of regular income and capital gain on the value of units at an acceptable risk.

The Fund will invest primarily in equity securities of growth companies operating in Malaysia, and to a lesser extent in foreign markets. Generally, companies that exhibit high probability of achieving above market and/or industry growth rate; that operate within a high growth sector; that have a professional and capable management team with proven ability to achieve sustainable growth; and that have a viable and scalable business model with products that continue to meet market needs are selected. The Fund commenced operations on 8 September 1995 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 15 February 2021.

16 HONG LEONG GROWTH 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 June 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 July 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.

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.”

HONG LEONG GROWTH FUND 17 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.

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.

18 HONG LEONG GROWTH FUND - 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.

(ii) Standards, amendments and interpretations that have been issued but not yet effective and have not been early adopted.

HONG LEONG GROWTH FUND 19 A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 January 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 GROWTH FUND The Fund classifies cash and cash equivalents, amount due from brokers/dealers, 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 amount due to brokers/dealers, 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 including the effects of currency translation 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 GROWTH 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.

Local 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.

Foreign quoted investments are valued at the last traded market prices quoted on the respective foreign stock exchanges at the close of the business day of the respective foreign stock exchanges.

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.

22 HONG LEONG GROWTH FUND 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.

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.

HONG LEONG GROWTH FUND 23 (c) Foreign currency

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.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss, except when deferred in other comprehensive income as qualifying cash flow hedges.

Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss.

(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.

24 HONG LEONG GROWTH FUND 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 is 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 represent 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.

HONG LEONG GROWTH FUND 25 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 taxed on investment income from foreign investments are based on the tax regime of the respective countries that the Fund invests in. Such 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.

26 HONG LEONG GROWTH FUND (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.

(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.

HONG LEONG GROWTH FUND 27 (k) Derivatives

A derivative is any contract that gives rise to a financial asset/ liability of the Fund and a financial liability/asset or equity instrument of another enterprise.

A financial asset is any asset that is cash, a contractual right to receive cash or another financial asset from another enterprise, a contractual right to exchange financial instruments with another enterprise under conditions that are potentially favorable, or an equity instrument of another enterprise.

A financial liability is any liability that is a contractual obligation to deliver cash or another financial asset to another enterprise, or to exchange financial instruments with another enterprise under conditions that are potentially unfavorable.

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

The fair value of forward foreign currency contracts is determined using forward exchange rates at the date of statements of financial position with the resulting value discounted back to present value.

The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and the nature of the item being hedged. Derivatives that do not qualify for hedge accounting are classified as held for trading and accounted for in accordance with the accounting policy set out in Note 2(b).

28 HONG LEONG GROWTH FUND (l) 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.

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 liabilities at FVTPL amortised cost Total RM RM RM

31.12.2020 Financial assets Cash and cash equivalents - 7,075,890 7,075,890 Amount due from brokers/dealers - 1,389,956 1,389,956 Amount due from the Manager -creation of units - 101,829 101,829 Derivatives (Note 9) 172,765 - 172,765 Dividends receivable - 497,157 497,157 Financial assets at FVTPL (Note 10) 191,611,495 - 191,611,495 191,784,260 9,064,832 200,849,092

Financial liabilities Amount due to the Manager -cancellation of units - 11,354 11,354 -management fee - 251,963 251,963 Amount due to the Trustee - 10,079 10,079 Distribution payable - 20,690 20,690 Other payables and accruals - 11,098 11,098 - 305,184 305,184

HONG LEONG GROWTH FUND 29 Financial Financial assets/ assets/ liabilities at liabilities at FVTPL amortised cost Total RM RM RM

30.06.2020 Financial assets Cash and cash equivalents - 13,901,140 13,901,140 Amount due from brokers/dealers - 14,188,314 14,188,314 Amount due from the Manager -creation of units - 875 875 Dividends receivable - 625,123 625,123 Financial assets at FVTPL (Note 10) 153,833,830 - 153,833,830 153,833,830 28,715,452 182,549,282

Financial liabilities Amount due to brokers/dealers - 15,745,913 15,745,913 Amount due to the Manager -cancellation of units - 21,631 21,631 -management fee - 206,758 206,758 -expenses - 11 11 Amount due to the Trustee - 8,270 8,270 Derivatives (Note 9) 33,392 - 33,392 Distribution payable - 6,731 6,731 Other payables and accruals - 18,708 18,708 33,392 16,008,022 16,041,414

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

(m) 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.

30 HONG LEONG GROWTH FUND

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 publicly traded derivatives and 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.

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 occurring 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.

HONG LEONG GROWTH FUND 31 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 or liability take place with sufficient frequency and volume to provide pricing information on an on-going basis.

(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).

32 HONG LEONG GROWTH FUND 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.

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

Level 1 Level 2 Level 3 Total RM RM RM RM

31.12.2020 Financial assets at FVTPL: - Quoted equity securities - local 147,251,917 - - 147,251,917 - Quoted equity securities - foreign 44,359,578 - - 44,359,578 Financial assets: - Derivatives - 172,765 - 172,765 191,611,495 172,765 - 191,784,260

HONG LEONG GROWTH FUND 33 Level 1 Level 2 Level 3 Total RM RM RM RM

30.06.2020 Financial assets at FVTPL: - Quoted equity securities - local 119,078,023 - - 119,078,023 - Quoted equity securities - foreign 34,755,807 - - 34,755,807 153,833,830 - - 153,833,830

Financial liabilities: - Derivatives - (33,392) - (33,392)

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).

Financial instruments that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs are classified within Level 2. This include derivatives. As Level 2 instruments include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information. The Fund’s policies on valuation of this financial assets/(liabilities) are stated in Note 2(b).

(ii) The carrying values of financial assets (other than financial assets at FVTPL and derivatives) and financial liabilities (other than derivatives) are a reasonable approximation of their fair values due to their short term nature.

34 HONG LEONG GROWTH FUND 4. INTEREST INCOME FROM FINANCIAL ASSETS MEASURED AT AMORTISED COST

2020 2019 RM RM

Interest income from: - Deposits with licensed financial institutions 1,556 - - Auto-sweep facility bank account 57,889 78,491 59,445 78,491

5. 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 December 2020, the management fee is recognised at a rate of 1.50% (2019: 1.50%) per annum.

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

6. TRUSTEE’S FEE

In accordance with Division 13.2 of the Deed, the Trustee is entitled to a fee not exceeding 0.06% per annum calculated daily based on the net asset value of the Fund.

For the financial period ended 31 December 2020, the Trustee’s fee is recognised at a rate of 0.06% (2019: 0.06%) per annum.

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

HONG LEONG GROWTH FUND 35 7. TAXATION

2020 2019 RM RM

Tax charge for the financial period: Current taxation - -

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

2020 2019 RM RM

Profit before taxation 36,898,917 12,342,464

Taxation at Malaysian statutory rate of 24% (2019: 24%) 8,855,740 2,962,191

Tax effects of: Investment income not subject to tax (9,639,954) (3,539,783) Expenses not deductible for tax purposes 432,075 275,490 Restriction on tax deductible expenses for unit trust fund 352,139 302,102 Taxation - -

8. DISTRIBUTION

2020 2019 RM RM

Prior financial years’ realised income 18,059,337 15,043,965 Net distribution amount 18,059,337 15,043,965

Date of Declaration

Distribution on 23/18 July Net distribution per unit (sen) 7.9174 6.8993 Gross distribution per unit (sen) 8.0000 7.0000

Net distribution above is sourced from prior financial years’ realised income. Gross distribution is derived using total income less total expenses.

36 HONG LEONG GROWTH FUND 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.

The above distribution has been proposed before taking into account the unrealised gain of RM25,527,233 (2019: unrealised loss of RM292,266) which is carried forward to the next financial period.

9. DERIVATIVES

Derivatives comprise forward currency contracts. The positive/ (negative) fair value represents the unrealised gain/(loss) on the revaluation of forward currency at the reporting date. The contract or underlying principal amount of the forward currency contracts and the corresponding gross positive/(negative) fair value at the end of each reporting date is analysed below:

31.12.2020 30.06.2020 RM RM

Derivative assets: Forward currency contracts 172,765 -

Derivative liabilities: Forward currency contracts - 33,392

2020 2019 RM RM

Net gain on derivatives: Realised gain on disposals 823,578 47,406 Changes in unrealised fair values 206,156 416,920 1,029,734 464,326

HONG LEONG GROWTH FUND 37 Contract or underlying Maturity principal *Fair value date amounts RM

31.12.2020 Hong Kong Dollar within 1 month 42,110,000 170,546 United States Dollar within 1 month 73,000 2,219 172,765

30.06.2020 Hong Kong Dollar within 1 month 24,006,000 (31,208) United States Dollar within 1 month 273,000 (2,184) (33,392)

* Being the difference between the contract price and the market forward price discounted at appropriate discount rates.

As the Fund does not adopt hedge accounting during the financial period, the change in the fair value of the forward currency contracts is recognised immediately in the statement of comprehensive income.

10. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (“FVTPL”)

31.12.2020 30.06.2020 RM RM

Financial assets at FVTPL: Quoted equity securities - local 147,251,917 119,078,023 Quoted equity securities - foreign 44,359,578 34,755,807 191,611,495 153,833,830

2020 2019 RM RM

Net gain on financial assets at FVTPL: Realised gain on disposals 12,062,852 13,763,199 Changes in unrealised fair values 25,366,478 (1,364,999) 37,429,330 12,398,200

38 HONG LEONG GROWTH FUND

Financial assets at FVTPL as at 31 December 2020 are as detailed below:

Percentage Aggregate Fair of net asset Quantity cost value value units RM RM %

QUOTED EQUITY SECURITIES - LOCAL

Main Market Consumer Products & Services Guan Chong Berhad 1,575,000 5,392,976 4,205,250 2.10 Johore Tin Berhad 2,500,000 4,327,550 5,025,000 2.50 Lii Hen Industries Bhd 1,360,000 5,564,852 5,412,800 2.70 5,435,000 15,285,378 14,643,050 7.30

Energy Bumi Armada Berhad 35,000,000 6,270,100 12,250,000 6.11

Healthcare Kossan Rubber Industries Bhd 164,800 1,178,330 741,600 0.37

Industrial Products & Services HeveaBoard Berhad 7,300,000 5,234,920 5,219,500 2.60 Hiap Teck Venture Berhad 17,800,000 8,881,260 8,188,000 4.08 HPMT Holdings Berhad 1,280,000 716,800 505,600 0.25 Lotte Chemical Titan Holding Berhad 3,200,000 5,898,730 8,864,000 4.42 PETRONAS Chemicals Group Berhad 2,010,300 14,224,952 14,936,529 7.45 Press Metal Aluminium Holdings Berhad 2,605,000 13,074,922 21,855,950 10.90 Samchem Holdings Berhad 4,050,000 4,382,250 4,495,500 2.24 SKP Resources Bhd 3,000,000 4,615,200 6,450,000 3.22 Techbond Group Berhad 4,050,000 5,389,390 5,062,500 2.53 45,295,300 62,418,424 75,577,579 37.69

Plantation Kim Loong Resources Berhad 3,600,000 5,624,080 5,760,000 2.87

Technology D&O Green Technologies Berhad 4,500,000 3,379,880 10,260,000 5.11 Inari Amertron Berhad 2,900,000 7,625,980 8,004,000 3.99 JHM Consolidation Berhad 2,800,000 4,767,320 5,348,000 2.67 Malaysian Pacific Industries Berhad 255,400 5,807,189 6,630,184 3.31 MY E.G. Services Berhad 4,186,200 8,077,083 8,037,504 4.01 14,641,600 29,657,452 38,279,688 19.09

HONG LEONG GROWTH FUND 39 Percentage Aggregate Fair of net asset Quantity cost value value units RM RM %

TOTAL QUOTED EQUITY SECURITIES - LOCAL 104,136,700 120,433,764 147,251,917 73.43

QUOTED EQUITY SECURITIES - FOREIGN

Hong Kong

Consumer, Cyclical China Yongda Automobiles Services Holdings Limited 1,200,000 7,815,661 7,971,989 3.98 Xiabuxiabu Catering Management (China) Holdings Co., Ltd 800,000 7,788,392 7,329,421 3.65 2,000,000 15,604,053 15,301,410 7.63

Consumer,Non-Cyclical Zhou Hei Ya International Holdings Co Ltd 1,030,000 4,893,266 4,398,067 2.19

Industrials Kerry Logistics Network Limited 920,000 7,588,441 8,104,648 4.04

Telecommunication Services Xiaomi Corporation 590,000 7,501,837 10,150,501 5.06

Utilities Network CSC Financial Co., Ltd.^ 1,200,000 5,983,318 6,404,952 3.20

TOTAL QUOTED EQUITY SECURITIES - FOREIGN 5,740,000 41,570,915 44,359,578 22.12

TOTAL INVESTMENTS 109,876,700 162,004,679 191,611,495 95.55

UNREALISED GAIN ON FINANCIAL ASSETS AT FVTPL 29,606,816

TOTAL FAIR VALUE OF FINANCIAL ASSETS AT FVTPL 191,611,495

40 HONG LEONG GROWTH FUND Financial assets at FVTPL as at 30 June 2020 are as detailed below:

Percentage Aggregate Fair of net asset Quantity cost value value units RM RM %

QUOTED EQUITY SECURITIES - LOCAL

Construction Gadang Holdings Berhad 3,200,000 2,773,463 1,472,000 0.89 Gamuda Berhad 900,000 2,947,905 3,276,000 1.97 GDB Holdings Berhad 8,400,000 4,898,520 4,746,000 2.85 WCT Holdings Berhad 4,000,000 1,906,200 1,920,000 1.15 16,500,000 12,526,088 11,414,000 6.86

Consumer Products & Services AirAsia Group Berrhad 4,000,000 3,410,000 3,500,000 2.10 3,690,000 8,813,690 9,335,700 5.61 Johore Tin Berhad 2,500,000 4,327,550 3,525,000 2.12 MBM Resources Berhad 1,287,400 5,336,002 4,171,176 2.50 Power Root Berhad 310,000 705,651 697,500 0.42 11,787,400 22,592,893 21,229,376 12.75

Energy Bumi Armada Berhad 35,000,000 6,270,100 8,050,000 4.83 Dayang Enterprise Holdings Bhd 2,350,000 5,866,141 2,961,000 1.78 37,350,000 12,136,241 11,011,000 6.61

Financial Services Bursa Malaysia Berhad 1,450,000 11,456,765 10,556,000 6.34 CIMB Group Holdings Berhad 1,000,000 3,568,400 3,560,000 2.14 2,450,000 15,025,165 14,116,000 8.48

Healthcare Hartalega Holdings Berhad 200,000 1,495,217 2,600,000 1.56 Corporation Bhd 360,000 2,177,160 5,796,000 3.48 560,000 3,672,377 8,396,000 5.04

HONG LEONG GROWTH FUND 41 Percentage Aggregate Fair of net asset Quantity cost value value units RM RM %

Industrial Products & Services Cahya Mata Sarawak Berhad 3,300,000 3,300,670 5,148,000 3.09 Dufu Technology Corp. Berhad 302,700 1,096,388 1,468,095 0.88 HPMT Holdings Berhad 1,280,000 716,800 435,200 0.26 Lotte Chemical Titan Holding Berhad 2,900,000 5,257,180 5,162,000 3.10 Luxchem Corporation Berhad 4,700,000 3,975,890 3,102,000 1.86 PETRONAS Chemicals Group Berhad 2,010,300 14,224,952 12,463,860 7.49 Press Metal Aluminium Holdings Berhad 1,795,000 8,903,855 8,131,350 4.88 SCGM Bhd 900,000 1,785,420 1,791,000 1.08 V.S. Industry Berhad 1,700,000 2,316,407 1,649,000 0.99 18,888,000 41,577,562 39,350,505 23.63

Plantation FGV Holdings Berhad 4,500,000 4,977,950 4,477,500 2.69

Technology D&O Green Technologies Berhad 1,600,000 1,144,160 1,160,000 0.70 Willowglen MSC Berhad 3,813,600 2,650,816 1,792,392 1.08 5,413,600 3,794,976 2,952,392 1.78

Transportation & Logistics Malaysia Airports Holdings Berhad 1,125,000 6,221,032 6,131,250 3.68

TOTAL QUOTED EQUITY SECURITIES - LOCAL 98,574,000 122,524,284 119,078,023 71.52

QUOTED EQUITY SECURITIES - FOREIGN

Hong Kong

Consumer, Non-Cyclical Ping An Healthcare and Technology Company Limited 50,000 3,255,439 3,258,756 1.96

Real Estate Owners & Developers KWG Property Holding Limited 850,000 5,851,951 6,117,837 3.67

42 HONG LEONG GROWTH FUND Percentage Aggregate Fair of net asset Quantity cost value value units RM RM %

Telecommunication Services Meituan Dianping 72,000 3,015,271 6,841,895 4.11 Weimob Inc. 2,500,000 9,897,924 13,446,860 8.07 2,572,000 12,913,195 20,288,755 12.18

Utilities Network CSC Financial Co., Ltd.^ 1,050,000 5,048,623 5,090,459 3.06

TOTAL QUOTED EQUITY SECURITIES - FOREIGN 4,522,000 27,069,208 34,755,807 20.87

TOTAL INVESTMENTS 103,096,000 149,593,492 153,833,830 92.39

UNREALISED GAIN ON FINANCIAL ASSETS AT FVTPL 4,240,338

TOTAL FAIR VALUE OF FINANCIAL ASSETS AT FVTPL 153,833,830

^ H Shares are shares of the companies incorporated in the Chinese mainland that is listed on the Hong Kong Stock Exchange. These shares are denominated in Hong Kong dollars and trade the same as other equities on the Hong Kong Stock Exchange.

11. UNITS IN CIRCULATION

01.07.2020 01.07.2019 to 31.12.2020 to 30.06.2020 No. of units No. of units

At the beginning of the financial period/year 228,410,473 218,453,687 Add: Creation of units during the financial period/year - Arising from applications 40,950,142 12,064,486 - Arising from distribution 24,180,380 21,091,118 Less: Cancellation of units during the financial period/year (42,799,609) (23,198,818) At the end of the financial period/year 250,741,386 228,410,473

HONG LEONG GROWTH FUND 43 12. MANAGEMENT EXPENSE RATIO (“MER”)

2020 2019 % %

MER (annualised) 1.62 1.62

Management expense ratio includes management fee, Trustee’s fee, auditors’ remuneration, tax agent’s fee, custodian fees 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+F) X 100 G Where; A = Management fee B = Trustee’s fee C = Auditors’ remuneration D = Tax agent’s fee E = Custodian fee F = Other expenses excluding Sales and Service Tax (“SST”) on transaction costs G = 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 RM188,271,903 (2019: RM162,096,986).

44 HONG LEONG GROWTH FUND 13. PORTFOLIO TURNOVER RATIO (“PTR”)

2020 2019 Times Times

PTR 1.48 1.05

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 = RM284,910,220 (2019: RM173,320,559) total disposals for the financial period = RM272,499,033 (2019: RM165,668,751)

14. 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 Berhad Ultimate holding company of the (“HLFG”) Manager Subsidiaries and associates of HLFG as Subsidiaries and associate companies disclosed in its financial statements of the ultimate holding company of the Manager

No units were held by the Manager and parties related to the Manager as at 31 December 2020 and 30 June 2020.

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.

HONG LEONG GROWTH FUND 45 31.12.2020 30.06.2020 RM RM

Related party balances Cash at bank: - Berhad 5,456,099 6,560,182 Amount due from brokers/dealers - Hong Leong Investment Bank Berhad 600,921 - Amount due to brokers/dealers - Hong Leong Investment Bank Berhad - (3,420,237) Derivatives: - Hong Leong Investment Bank Berhad 172,765 (33,392) 6,229,785 3,106,553

2020 2019 RM RM

Related party transactions Interest income from deposits with licensed financial institutions: - Hong Leong Bank Berhad 251 -

Interest income from auto-sweep facility bank account: - Hong Leong Bank Berhad 57,889 78,491

Purchase of quoted equity securities: - Hong Leong Investment Bank Berhad 27,842,900 61,980,803

Purchase of quoted collective investment schemes: - Hong Leong Investment Bank Berhad - 3,401,074

Disposal of quoted equity securities: - Hong Leong Investment Bank Berhad 81,046,776 49,829,629

Disposal of quoted collective investment schemes: - Hong Leong Investment Bank Berhad - 5,385,805

Disposal of quoted warrant: - Hong Leong Investment Bank Berhad - 516,850

46 HONG LEONG GROWTH FUND 15. 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 %

2020 Affin Hwang Investment Bank Berhad 139,052,138 24.42 277,957 20.55 Hong Leong Investment Bank Berhad* 108,889,676 19.12 272,611 20.15 JPMorgan Securities (Malaysia) Sdn Bhd 91,280,389 16.03 228,055 16.86 Credit Suisse Securities (Malaysia) Sdn Bhd 59,418,349 10.43 148,326 10.96 Investment Bank Berhad 45,198,442 7.94 112,970 8.35 Alliance Investment Bank Berhad 40,047,239 7.03 100,173 7.41 CLSA Securities Malaysia Sdn Bhd 30,035,955 5.27 75,058 5.55 CLSA Limited 20,366,633 3.58 51,099 3.78 Nomura Securities (Malaysia) Sdn Bhd 13,439,437 2.36 33,597 2.48 Macquarie Malaysia Sdn Bhd 4,212,907 0.74 10,553 0.78 Others 17,516,082 3.08 42,305 3.13 569,457,247 100.00 1,352,704 100.00

HONG LEONG GROWTH FUND 47 Percentage of total Values Percentage Brokerage brokerage of trade of total trade fees fees RM % RM %

2019 Hong Leong Investment Bank Berhad* 121,114,161 34.34 302,713 36.40 Affin Hwang Investment Bank Berhad 96,811,091 27.45 197,090 23.70 JPMorgan Securities (Malaysia) Sdn Bhd 30,270,860 8.58 75,639 9.10 Credit Suisse Securities (Malaysia) Sdn Bhd 19,722,850 5.59 49,261 5.92 CLSA Securities Malaysia Sdn Bhd 16,275,865 4.61 40,670 4.89 Maybank Investment Bank Berhad 14,028,351 3.98 35,127 4.22 Alliance Investment Bank Berhad 12,562,050 3.56 31,447 3.78 Public Investment Bank Berhad 10,373,180 2.94 25,950 3.12 Citigroup Global Markets Malaysia Sdn Bhd 7,690,572 2.18 17,313 2.08 RHB Investment Bank Berhad 5,840,122 1.65 14,632 1.76 Others 18,045,146 5.12 41,800 5.03 352,734,248 100.00 831,642 100.00

* 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.

48 HONG LEONG GROWTH FUND 16. 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 GROWTH FUND 49 Performance Data

Financial Period 30/06/20– 31/12/20 %

A (i) Portfolio Compositions: Construction – Consumer Products & Services 17.12 Financial Services – Infrastructure Project Companies – Industrial Products & Services 41.73 Property – Trading/Services – Technology 19.09 Telecommunication & Media 5.06 Energy 6.11 Information Technology – Hotels – Utilities 3.20 Real Estate – Transportation & Logistics – Health Care 0.37 Plantation 2.87 Collective Investment Schemes – Warrants – Deposits and Cash Equivalents 4.45

Country: Malaysia 73.43 Hong Kong 22.12 Singapore – Indonesia – Deposits and Cash Equivalents 4.45 (ii) Total Net Asset Value (ex-distribution) RM200,543,908

(iii) Net Asset Value Per Unit (ex-distribution) RM 0.7998 Units in Circulation (ex-distribution) 250,741,386 (iv) Highest/Lowest NAV Per Unit Highest NAV Per Unit RM0.8091 (ex-distribution) Lowest NAV Per Unit RM0.6805

(v) Total Return of the Fund* 21.74% - Capital Growth 9.71% - Income Distribution 12.03%

(vi) Distribution Per Unit Additional Units – Distributions (Gross) 8.0 sen/unit Distributions (Net) 7.9174 sen/unit Distribution Date 23/07/2020

Additional Units – Distributions (Gross) – Distributions (Net) – Distribution Date – (vii) Management Expense Ratio (MER) 1.62%

(viii) Portfolio Turnover Ratio (PTR) (times) 1.48#

B. Average Total Return, NAV Per Unit-to-NAV Per Unit basis (as at 31/12/2020)* (i) One year 22.88% (ii) Three years 11.09% (iii) Five years 13.05% (iv) Ten years 11.33%

* Source : Lipper For Investment Management (Returns are calculated after adjusting for distributions and/or additional units, if any)

# The PTR decreased by 0.85 times (36.48%) as compared to 2.33 times for the financial year ended 30 June 2020 mainly due to lower level of rebalancing activities and increased by 0.43 times (40.95%) as compared to 1.05 times for the financial period from 1 July 2019 to 31 December 2019 mainly due to higher level of rebalancing activities undertaken by the Fund.

50 HONG LEONG GROWTH FUND Financial Year Financial Year Financial Year Financial Year Financial Year 30/06/19– 30/06/18– 30/06/17– 30/06/16– 30/06/15– 30/06/20 30/06/19 30/06/18 30/06/17 30/06/16 % % % % %

6.86 10.80 6.35 5.56 8.85 14.71 9. 56 9. 57 17.97 8.06 8.48 17.79 32.14 13.03 21.51 – – 4.11 3.72 3.94 23.63 10.35 10.30 12.80 9.06 – 5.07 – 3.76 6.64 – – 16.80 18.38 16.28 1.78 10.37 6.36 7. 53 – 12.18 2.97 – – – 6.61 6.95 – – 1.53 – – 3.51 2.69 – – – – 0.76 1.42 3.06 8.85 – 1.07 – 3.67 3.38 – 0.65 – 3.68 – – – – 5.04 – – – – 2.69 – – – – – 4.42 – – 5.44 – 0.49 – – 0.25 7.61 9.00 10.86 12.08 17.02

71.52 72.21 73.84 71.61 74.10 20.87 18.79 15.30 16.26 – – – – – 5.88 – – – 0.05 3.00 7.61 9.00 10.86 12.08 17.02 RM166,507,868 RM161,059,422 RM161,635,886 RM167,126,717 RM152,620,804 RM0.7290 RM0.7373 RM0.7624 RM0.7894 RM0.7584 228,410,473 218,453,687 212,011,098 211,713,330 201,228,795 RM0.7666 RM0.7908 RM0.8395 RM0.7915 RM0.8314 RM0.4323 RM0.6236 RM0.7314 RM0.7026 RM0.7071 9.03% 4.64% 4.32% 18.10% -3.75% -1.13% -3.29% -3.42% 4.09% -7.88% 10.16% 7.93% 7.74% 14.01% 4.13% – – – – – 7.0 sen/unit 6.0 sen/unit 6.0 sen/unit 3.5 sen/unit 3.5 sen/unit 6.8993 sen/unit 5.9216 sen/unit 5.8944 sen/unit 3.4204 sen/unit 3.3816 sen/unit 18/07/2019 19/07/2018 28/07/2017 19/07/2016 14/07/2015 – – – – – – – – 5.94 sen/unit – – – – 5.8179 sen/unit – – – – 18/01/2017 – 1.61% 1.64% 1.71% 1.72% 1.71% 2.33 1.90 1.64 1.45 2.07

HONG LEONG GROWTH FUND 51 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) OCBC Bank (Malaysia) Berhad (295400-W) HSBC Bank (Malaysia) Berhad (127776-V) Standard Chartered Bank Malaysia Berhad (115793-P) CIMB Private Banking (18417-M) Affin Bank Berhad (25046-T) United Overseas Bank (Malaysia) Berhad (271809-K) Registered Independent Tied Agents with FiMM

52 HONG LEONG GROWTH 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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56 HONG LEONG GROWTH FUND Hong Leong Asset Management Bhd (318717-M) www.hlam.com.my