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AFFIN HWANG WORLD SERIES - DIVIDEND VALUE FUND Quarterly Report and Financial Statements As at 31 December 2019

Contents Page

QUARTERLY REPORT .................................................................................................................. 2

STATEMENT OF COMPREHENSIVE INCOME ............................................................................. 8

STATEMENT OF FINANCIAL POSITION ....................................................................................... 9

STATEMENT OF CHANGES IN NET ASSET ............................................................................... 11

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QUARTERLY REPORT FUND INFORMATION

Fund Name Affin Hwang World Series – Dividend Value Fund

Fund Type Growth

Fund Category Feeder (Wholesale)

Investment Objective The Fund seeks to achieve capital appreciation over medium to long-term period

Benchmark Dow Jones Asia Select Dividend 30 Index

Distribution Policy Subject to the availability of income, the Fund endeavours to distribute income on a quarterly basis, after the end of its first financial year

Performance Review MYR Class For the period from 1 October 2019 to 31 December 2019, the Fund recorded a return of 8.54%. Compared to the Benchmark return of 12.80%, the Fund thus underperformed its Benchmark by 4.26%. The Net Asset Value (NAV) per Unit of the Fund as at 31 December 2019 was RM0.5565 while the NAV per Unit as at 30 September 2019 was RM0.5173. On total NAV basis, the Fund’s NAV stood at RM73.622 million as at 31 December 2019. (See Table 1 for performance of the Fund and Figure 1 for movement of the Fund versus the Benchmark respectively). USD Class For the period from 1 October 2019 to 31 December 2019, the Fund recorded a return of 11.08%. Compared to the Benchmark return of 15.52%, the Fund thus underperformed its Benchmark by 4.44%. The Net Asset Value (NAV) per Unit of the Fund as at 31 December 2019 was USD0.5223 while the NAV per Unit as at 30 September 2019 was USD0.4747. On total NAV basis, the Fund’s NAV stood at USD9.240 million as at 31 December 2019. (See Table 1 for performance of the Fund and Figure 1 for movement of the Fund versus the Benchmark respectively). AUD Class For the period from 1 October 2019 to 31 December 2019, the Fund recorded a return of 7.05%. Compared to the Benchmark return of 10.98%, the Fund thus underperformed its Benchmark by 3.93%. The Net Asset Value (NAV) per Unit of the Fund as at 31 December 2019 was AUD0.5660 while the NAV per Unit as at 30 September 2019 was AUD0.5333. On total NAV basis, the Fund’s NAV stood at AUD15.665 million as at 31 December 2019. (See Table 1 for performance of the Fund and Figure 1 for movement of the Fund versus the Benchmark respectively). SGD Class For the period from 1 October 2019 to 31 December 2019, the Fund recorded a return of 8.15%. Compared to the Benchmark return of 12.32%, the Fund thus underperformed its Benchmark by 4.17%. The Net Asset Value (NAV) per Unit of the Fund as at 31 December 2019 was SGD0.5120 while the NAV per Unit as at 30 September 2019 was SGD0.4780. On total NAV basis, the Fund’s NAV stood at SGD9.604 million as at 31 December 2019. (See Table 1 for performance of the Fund and Figure 1 for movement of the Fund versus the Benchmark respectively).

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Table 1: Performance of the Fund USD Class

3 Months (1/10/19 - 31/12/19)

6 Months (1/7/19 - 31/12/19)

1 Year (1/1/19 - 31/12/19)

3 Years (1/1/17 - 31/12/19)

Since Commencement

(23/7/15 - 31/12/19)

Fund 11.08% 3.53% 15.04% 26.75% 12.76%

Benchmark 15.52% 8.78% 16.20% 30.79% 13.67%

Outperformance / (Underperformance) (4.44%) (5.25%) (1.16%) (4.04%) (0.91%)

AUD Class

3 Months (1/10/19 - 31/12/19)

6 Months (1/7/19 - 31/12/19)

1 Year (1/1/19 - 31/12/19)

3 Years (1/1/17 - 31/12/19)

Since Commencement

(23/7/15 - 31/12/19)

Fund 7.05% 3.61% 16.07% 30.36% 21.72%

Benchmark 10.98% 8.58% 16.51% 34.39% 19.31%

Outperformance / (Underperformance) (3.93%) (4.97%) (0.44%) (4.03%) 2.41%

MYR Class

3 Months (1/10/19 - 31/12/19)

6 Months (1/7/19 - 31/12/19)

1 Year (1/1/19 - 31/12/19)

3 Years (1/1/17 - 31/12/19)

Since Commencement

(23/7/15 - 31/12/19)

Fund 8.54% 2.51% 13.86% 14.24% 19.52%

Benchmark 12.80% 7.55% 14.98% 19.24% 22.09%

Outperformance / (Underperformance) (4.26%) (5.04%) (1.12%) (5.00%) (2.57%)

SGD Class

3 Months (1/10/19 - 31/12/19)

6 Months (1/7/19 - 31/12/19)

1 Year (1/1/19 - 31/12/19)

3 Years (1/1/17 - 31/12/19)

Since Commencement

(23/7/15 - 31/12/19)

Fund 8.15% 3.03% 13.69% 17.66% 10.62%

Benchmark 12.32% 8.06% 14.63% 21.56% 11.87%

Outperformance / (Underperformance) (4.17%) (5.03%) (0.94%) (3.90%) (1.25%)

Table 2: Volatility as at 31 December 2019

3 Year

Clases USD Class AUD Class MYR Class SGD Class

Fund 14.54 10.63 12.57 11.91

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The 3-year annualised volatility as at 31 December 2019 stood at 14.54 (USD Class), 10.63 (AUD Class), 12.57 (MYR Class) and 11.91 (SGD Class), reflecting the Fund’s mixed asset exposure to fixed income, and equities. (Volatility is a number calculated based on methodology endorsed and relating to the sensitivity of the portfolio return of a fund to changes in the market conditions and the general economy. It is also based on an evaluation of a specific set of quantitative factors involving the performance of the Fund.)

Figure 1: Movement of the Fund versus the Benchmark

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“This information is prepared by Affin Hwang Asset Management Berhad (AFFINHWANGAM) for information purposes only. Past earnings or the fund’s distribution record is not a guarantee or reflection of the fund’s future earnings/future distributions. Investors are advised that unit prices, distributions payable and investment returns may go down as well as up.” Benchmark: Dow Jones Asia Select Dividend

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Asset Allocation For a snapshot of the Fund’s asset mix during the period under review, kindly refer to Figure 2. Figure 2: Asset Allocation of the Fund

31 Dec 2019 30 Sep 2019 30 Jun 2019

(%) (%) (%)

Collective investment scheme 98.02 97.33 98.24

Cash & money market 1.98 2.67 1.76

Total 100.00 100.00 100.00

Strategies Employed The positive sentiment brought by Phase-One-Deal and stabilizing economic data supported the Asia ex Japan rally in the fourth quarter. Our portfolio grew 11.4% in the quarter. December ended 2019 on a high note for regional equities despite the first half filled with global recession fears and market turned risk-off. It was evidenced by the lowering treasury yield where the flight to quality was deemed challenging for equity dividend performance in the first part of 2019. The fund however, remained fully invested throughout the year as valuations headed into the year at attractive level after the lackluster 2018 and signs of earnings recovery in specific cyclical sectors drove our constructive view in 2019. Our patience paid off in the second half of the year supported by positive development of the US-China trade talk and stabilized macro data suggested recession was an unlikely event. With that said, our rotation into Taiwan and South Korea technology hardware companies prevailed as outbound shipments in electronic parts and information and communication products continued to grow robustly, supported by the wave of 5G development and global supply chain reshuffle. On the other hand, our holdings in China real estate developers were also amongst the key performance contributors as the sector was fueled by solid contracted sales, while CNY appreciation and a neutral policy tone on property tightening also supported the share price performance. On the flip side, our positions in South Asia caused some detractions to the portfolio as the growth prospect within the region was deemed unexciting compared to its slightly above average valuation. Investment Case: Taiwan Semiconductor Manufacturing Company Ltd. (2330 TT) The company (TSMC) pioneered the pure-play foundry business with around 60% market share and leads the most advanced manufacturing node. It is the key enabler for 5G and other emerging technology innovations, such as Artificial Intelligence, Internet of Things (IoT), smart driving etc. TSMC was among the top performance contributor for our portfolio in 2019. It was one of our top 10 core holdings and was added into the top 3 since the second half of the year. Fueled by the 5G developments and robust global demand on IoT devices, the inventory restocking in the second half of 2019 provided strong support to TSMC earnings rebound and literally, a positive guidance on 2020 outlook. In addition, the trend of China localizing their semiconductor developments is set to accelerate after the geopolitical event since 2018. TSMC is poised to benefit from more aggressive China chipset developments given its technology leadership in the semiconductor foundry space. We expect the increasing per-device silicon content to fuel TSMC’s revenue growth momentum in the coming years. TSMC consistently delivers 20-30% return-on-equity and increases its cash dividend payout during both up and down cycles. Market Review China: Staying the course Trade talks between the U.S. and China hit the headlines throughout 2019. As the Phase-One deal was inked near the end of the year, the tension has eased, adding positive spin to the market in the new year. Now, the uncertainty is the next phase of deal negotiations – when and whether they are to take place after the initial pact. The volatility of the negotiation would not be a surprise in 2020 and we remain closely monitoring the development.

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In China, despite the edge down of third-quarter GDP growth to 6.0% year-on-year, fourth-quarter economic data showed the economy might be reaching its cyclical bottom. December’s manufacturing Purchasing Managers’ Index (PMI) stabilized in the expansion territory at 50.2 while November’s industrial profits rebounded strongly to a 5.4% year-on-year rise from a 9.9% year-on-year decline in October. To ensure economic stabilization, the Chinese government continues to adopt an accommodating policy approach. The People’s Bank of China adjusted down a string of monetary policy tools, including the reserve requirement rate (RRR), the loan prime rate (LPR) and the medium-term lending facility (MLF) rate, during the quarter, to reduce borrowers’ funding costs. It is widely understood that the central government is not targeting a sharp V-shape economic rebound as the authority has been cautious in implementing stimulation program to avoid systematic risks. Government supports are expected to go hand in hand with a bottoming macro environment to enable Chinese corporates’ profit recovery in 2020. Taiwan: Trade optimism strengthened outlook As part of the initial trade agreement reached between the U.S. and China in mid-December, previously planned U.S. tariffs on Chinese-made consumer goods including smartphones and laptops were scrapped. The tentative trade agreement is helpful to boost global demand for electronic products and support recovery in the semiconductor industry. With that said, total exports in the fourth quarter finished on a high note, peaking at a historical height of US$87.1 billion and resuming year-on-year growth for the first time since the third quarter of 2018. The Taiwanese government expects robust demand for IoT (internet of things) smart devices to remain and drive stable exports growth in the first quarter of 2020. South Korea: Exports is expected to return to growth in 2020 A rebound in exports to China in December after declining for 13 consecutive months and stabilizing memory chip prices added to optimism that Korea’s exports would return to growth in 2020. Meanwhile, as global trade uncertainties and geopolitical risks persist, the Bank of Korea said it would remain accommodative in 2020. The Korean government also plans expansionary fiscal policies to facilitate investment, domestic consumption and exports to help the economy regain strength. Korea now expects its economy to grow 2.4% year-on-year in 2020, speeding up from 2019’s 2.0% year-on-year. ASEAN: Lackluster environment despite accommodative policies and trade optimism The overall region outlook remains lackluster relative to north Asia from earnings growth and valuation perspective. Indonesia is our preferred country given the underperformance last year and also the improved sentiment. Other developments that may be a tailwind for the economy includes the Omnibus Law which tries to reform the labour laws and to make Indonesia more attractive to foreign investments. In addition, reforms on the various State Owned Enterprises (SOEs) will another potential tailwind. Investment Outlook As 2019 draws to a close, we look back and see vast challenges in the past 12 months. The global economy has walked through quite a bit of turbulence to reach the current tepid stage. As the renewed policy easing efforts continue, we have to admit that the world is now a place where central banks are to once again utilize liquid monetary conditions. Because of an expectation of further injection of liquidity, the likelihood of global economic recession is reduced. The low interest rate environment is expected to stay in 2020 and shall add positive spin to equity dividend performance within the region. We will also be determining the level of effectiveness of the expansionary policies rolled out amidst geopolitical uncertainties, and decide whether they are still effective to pilot economic growth from here and confine the possibility of contraction. From the fundamental aspect, corporate earnings recovery remains solid in the region. Combined with reasonable valuation, we believe Asia ex Japan is a place where risk-return profile stands out.

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STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL PERIOD ENDED 31 DECEMBER 2019 Financial Financial period ended period ended 31.12.2019 31.12.2018 USD USD INVESTMENT INCOME/(LOSS) Dividend income 2,180,034 2,274,504 Interest income from financial assets at amortised cost 2,361 2,596 Net loss on foreign currency exchange (9,649) (22,407) Net loss on financial assets at fair value through profit or loss (878,495) (13,075,469) ────────── ──────────

1,294,251 (10,820,776) ────────── ──────────

EXPENSES Management fee (628,538) (812,422) Trustee fee (15,291) (19,695) Auditors' remuneration (1,381) (1,463) Tax agent's fee (644) (682) Other expenses (8,511) (19,323) ────────── ──────────

(654,365) (853,585) ────────── ──────────

NET PROFIT/(LOSS) BEFORE FINANCE COST 639,886 (11,674,361) FINANCE COST Distributions (1,392,883) (1,182,668) ────────── ──────────

DECREASE IN NET ASSETS ATTRIBUTABLE TO UNITHOLDERS (752,997) (12,857,029) ══════════ ══════════

Decrease in net assets attributable to unitholders income comprise the following:

Realised amount (298,104) 288,185 Unrealised amount (454,893) (13,145,214)

────────── ──────────

(752,997) (12,857,029) ══════════ ══════════

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STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2019 2019 2018 USD USD ASSETS Cash and cash equivalents 1,251,292 2,763,617 Amount due from Brokers 202,584 - Amount due from Manager - rebate of management fee receivable 47,214 57,257 Financial assets at fair value through profit or loss 44,459,682 53,532,686 ────────── ──────────

TOTAL ASSETS 45,960,772 56,353,560 ────────── ──────────

LIABILITIES Amount due to Manager - management fee 63,341 79,173 - cancellation of units 529,858 433,268 Amount due to Trustee 1,535 1,920 Amount due to brokers - Auditors’ remuneration 1,457 1,576 Tax agent’s fee 2,843 1,984 Other payable and accruals 2,687 2,512 ────────── ──────────

TOTAL LIABILITIES 601,721 520,433 ────────── ──────────

NET ASSET VALUE OF THE FUND 45,359,051 55,833,127 ══════════ ══════════

NET ASSETS ATTRIBUTABLE TO UNITHOLDERS 45,359,051 55,833,127 ══════════ ══════════

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STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2019 (CONTINUED)

2019 2018 USD USD REPRESENTED BY: FAIR VALUE OF OUTSTANDING UNITS - AUD Class 10,979,584 14,994,045 - RM Class 18,000,458 19,542,640 - SGD Class 7,139,311 9,578,912 - USD Class 9,239,698 11,717,530 ────────── ──────────

45,359,051 55,833,127 ══════════ ══════════

NUMBER OF UNITS IN CIRCULATION - AUD Class 27,675,000 41,954,000 - RM Class 132,293,000 159,347,000 - SGD Class 18,758,000 27,837,000 - USD Class 17,689,000 24,821,000 ────────── ──────────

196,415,000 253,959,000 ══════════ ══════════

NET ASSET VALUE PER UNIT (USD) - AUD Class 0.3967 0.3574 - RM Class 0.1361 0.1226 - SGD Class 0.3806 0.3441 - USD Class 0.5223 0.4721 ══════════ ══════════

NET ASSET VALUE PER UNIT IN RESPECTIVE CURRENCIES - AUD Class AUD0.5660 AUD0.5053 - RM Class RM0.5565 RM0.5068 - SGD Class SGD0.5120 SGD0.4684 - USD Class USD0.5223 USD0.4721 ══════════ ══════════

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STATEMENT OF CHANGES IN NET ASSET ATTRIBUTABLE TO UNITHOLDERS FOR THE FINANCIAL PERIOD ENDED 31 DECEMBER 2019 Financial Financial period ended period ended 31.12.2019 31.12.2018 USD USD NET ASSETS ATTRIBUTABLE TO UNITHOLDERS AT THE BEGINNING OF THE FINANCIAL PERIOD 60,075,088 71,635,705 Movement due to units created and cancelled during the financial period Creation of units arising from applications 3,721,126 9,329,923 - AUD class 1,195,500 3,330,105 - RM class 2,299,024 3,166,748 - SGD class 95,981 812,948 - USD class 130,621 2,020,122 Creation of units arising from distribution 1,358,567 1,261,522 - AUD class 326,158 375,591 - RM class 492,353 379,534 - SGD class 231,340 240,317 - USD class 308,716 266,080 Cancellation of units (19,042,733) (13,536,994) - AUD class (6,615,336) (3,803,948) - RM class (5,322,040) (5,056,221) - SGD class (3,545,105) (1,042,422) - USD class (3,560,252) (3,634,403) Net decrease in net assets attributable to unitholders during the financial period (752,997) (12,857,029) - AUD class (87,216) (3,359,948) - RM class (274,658) (4,431,743) - SGD class (138,407) (2,101,428) - USD class (252,716) (2,963,910) ───────── ─────────

NET ASSETS ATTRIBUTABLE TO UNITHOLDERS AT THE END OF THE FINANCIAL PERIOD 45,359,051 55,833,127 ═════════ ═════════

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