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 Malaysia 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%), PETRONAS 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%.