eastspring investments bond fundbnm cut the overnight policy rate (“opr”) by 100 bps during the...

FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 30 JUNE 2020

INTERIM REPORT

EASTSPRING INVESTMENTSBOND FUND

Eastspring Investments Berhad 200001028634 (531241-U)Level 22, Menara Prudential, Persiaran TRX Barat55188 Tun Razak Exchange, Kuala LumpurT: (603) 2778 3888 F: (603) 2789 7220eastspring.com/my

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

Dear Valued Investor,

Greetings from Eastspring Investments Berhad!

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

We are pleased to enclose a copy of the Annual/Interim/Quarterly Fund Reports of Eastspring Investments Berhad’s fund(s) for the reporting period ended 30 June 2020.

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

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

Yours sincerely,

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

TABLE OF CONTENTS

Fund Information 1

Key Performance Data 3

Manager’s Report 5

Market Review 8

Rebates and Soft Commissions 9

Statement by the Manager 12

Trustee’s Report to the Unit Holders of

Eastspring Investments Bond Fund 13

Unaudited Statement of Comprehensive Income 14

Unaudited Statement of Financial Position 15

Unaudited Statement of Changes in Equity 16

Unaudited Statement of Cash Flows 17

Summary of Significant Accounting Policies 18

Notes to the Unaudited Financial Statements 26

Corporate Directory 55

FUND INFORMATION

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

Fund Category/ Type

Bond/income

Fund Objective The Fund seeks to provide investors with a steady stream of income* returns by investing principally** in a portfolio of investment grade fixed income securities with exposure in noninvestment grade fixed income securities which yield above average returns.

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

* Income distributed to a Unit Holder will be reinvested into additional Units unless Unit Holder opts for the distribution to be paid out.

** principally refers to minimum 70% of the Fund’s NAV

Performance Benchmark

The performance benchmark of the Fund is Quant Shop Malaysian Government Securities Medium Index (“Quant Shop MGS Medium Index”).

Source: www.quantshop.com

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

Fund Income Distribution Policy

At least once a year, subject to the availability of income

1Client Services : 03-2778 1000

Interim Report

FUND INFORMATION (CONTINUED)

Breakdown of Unit Holdings by Size

As at 30 June 2020, the size of Eastspring Investments Bond Fund stood at 457.035 million units.

Fund Size

Breakdown of Unit Holdings

Unit HoldingsNo Of Accts %

Total Unit Held

(‘000) %

5,000 units and below 694 20.62 1,755 0.38

5,001 to 10,000 units 538 15.99 3,931 0.86

10,001 to 50,000 units 1,296 38.51 32,017 7.01

50,001 to 500,000 units 754 22.41 94,900 20.76

500,001 units and above 83 2.47 324,431 70.99

Total 3,365 100.00 457,034 100.00

* excludes units held by the Manager

Jan2020

Feb2020

Mar2020

Apr2020

May2020

Jun2020

Un

its

(Mill

ion

) 400

350

0

500

450

300

250

200

150

100

50

Client Services : 03-2778 10002

Eastspring Investments Bond Fund

KEY PERFORMANCE DATAFOR THE FINANCIAL PERIOD ENDED

Category 30.6.2020 30.6.2019 30.6.2018

(%) (%) (%)

Unquoted fixed income securities 78.07 92.88 88.07

Cash and other assets 21.93 7.12 11.93

Total 100.00 100.00 100.00

Net Asset Value (NAV) (RM'000) 314,561 224,642 295,540

Units In Circulation (Units '000) 457,035 330,323 444,862

Net Asset Value Per Unit (RM) 0.6883 0.6799 0.6643

Highest Net Asset Value Per Unit (RM) 0.6968 0.6822 0.6643

Lowest Net Asset Value Per Unit (RM) 0.6589 0.6537 0.6551

Total Return (%)

- Capital Growth 2.23 3.91 1.44

- Income Distribution - - -

Total Return (%) 2.23 3.91 1.44

Gross Distribution Per Unit (RM) - - -

Net Distribution Per Unit (RM) - - -

Management Expense Ratio (MER) (%)* 0.55 0.55 0.57

Portfolio Turnover Ratio (PTR) (times)^ 0.20 0.25 0.13

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

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


Interim Report

KEY PERFORMANCE DATA (CONTINUED)

1 year 1.7.2019 to

30.6.2020

3 years 1.7.2017 to

30.6.2020

5 years1.7.2015 to

30.6.2020

(%) (%) (%)

Average total return 5.43 5.08 4.78

Year ended1.1.2019 to31.12.2019

1.1.2018 to31.12.2018

1.1.2017 to31.12.2017

1.1.2016 to31.12.2016

1.1.2015 to31.12.2015

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

Annual total return 7.17 4.05 4.51 3.96 11.71

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

Bases of calculation and assumptions made in calculating returns:

Percentage growth =

NAVt = NAV at the end of the period

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

Adjusted for unit split and distribution paid out for the period

n = Number of years

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

NAVt -1NAV0



Fund Performance Over the 5-year period, the Fund recorded a return of 26.31%, underperforming the benchmark return of 28.23% by 1.92%.

During the period under review, the Fund registered a return of 2.23%, underperforming the benchmark return of 4.69% by 2.46%.

For the period under review, the Fund’s underperformance was attributable to the Fund’s overweight position in selected long tenor bond that underperformed the medium-term government bond index.

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

Benchmark: Quant Shop Malaysian Government Securities Medium Index (“Quant Shop MGS Medium Index”).

Source: Lipper for Investment Management and www.quantshop.com, as at 30 June 2020.

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

MANAGER’S REPORT

Eastspring Investments Bond Fund Benchmark

Eastspring Investments Bond Fund- 5 Years Return Vs Benchmark

5 ye

ars

% C

han

ge

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Jun2015

Mar2016

Nov2015

Dec2016

Jul2016

Aug2017

Apr2017

May2018

Dec2017

Jan2019

Sep2018

Oct2019

May2019

Jun2020

Feb2020


Interim Report

MANAGER’S REPORT (CONTINUED)

Analysis of Fund Performance

For the financial period ended 30 June 2020:

Income Return

Capital Return*

Total Return

Total Return of Benchmark

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

0.00 2.23 2.23 4.69

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

Distribution/ Unit Split

No distribution or unit split were declared for the financial period ended 30 June 2020.

Investment Strategy During the Period Under Review

The Fund participated in selected quality bond issuances for yield pick-up, and traded on market volatility, subject to liquidity constraints.



Asset Allocation

Asset Allocation30-Jun

202031-Dec

2019 Changes

(%) (%) (%)

Unquoted fixed income securities 78.07 92.41 (14.34)Cash and other assets 21.93 7.59 14.34

Asset Allocation as at 30 June 2020

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

State of Affairs ofthe Fund

There have been neither significant change to the state of affairs of the Fund nor any circumstances that materially affect any interests of the unit holders during the period under review.

Cross-Trade Transaction

During the period under review, there were cross-trades executed through a dealer or a financial institution on an arm’s length and fair value basis and in the best interest of the Fund. The investment committee for the Fund has reviewed that such trades for the period from January to March 2020 were transacted on an arm’s length and fair value basis and in the best interest of the Fund. There were no cross-trades executed for the period from April to June 2020.

MANAGER’S REPORT (CONTINUED)

Cash and other assets 21.93%

Unquoted fixed income securities

78.07%


Interim Report

MARKET REVIEW

The Covid-19 outbreak developed into a full-blown global pandemic during the review period, prompting governments across the world to impose movement restrictions to gain control over the highly infectious virus. Given the economic turmoil triggered by the Covid-19 pandemic, the Fed delivered two off-cycle cuts totalling 150bps in March, effectively taking the Fed Funds Rate to the zero lower-bound of 0% - 0.25%. In addition to cutting rates the Fed also announced a policy of unlimited quantitative easing to further support the US economy.

BNM cut the overnight policy rate (“OPR”) by 100 bps during the review period, a 25 bps cut in January, a 25 bps cut in March and a 50 bps cut in May, bringing the OPR to its lowest level since 2009. BNM also cut the statutory reserve requirement (“SRR”) ratio from 3.00% to 2.00% and allowed financial institutions to recognize MGS and GII in their statutory reserve requirements from 16 May 2020 until 31 May 2021, these measures are expected to release around RM 46 billion of liquidity into the banking system. BNM’s monetary policy direction for 2H2020 is broadly expected to be data-dependent given the uncertainties surrounding the Covid-19’s impact on the domestic economic activities.

The Pakatan Harapan government didn’t survive long enough to see its second anniversary. In February 2020 Azmin Ali and Muhyiddin Yasssin led a faction of 31 MPs out from Pakatan. The ex-Pakatan factions allied with Barisan Nasional, PAS and the ruling Sarawak based parties to form a new government with Muhyiddin Yassin as Prime Minister.

On the economic front, Malaysia’s Gross Domestic Product (“GDP”) grew 0.7% year-on-year (“y-o-y”) in 1Q2020 (4Q2019: 3.6%), the weakest quarter since 3Q2009. The weak GDP number was driven by poor net exports (-3.7% y-o-y) whilst private consumption remained the key growth driver. (+6.7% y-o-y). Malaysia imposed its movement control order (“MCO”) on 18 March 2020, which was subsequently relaxed in stages during 2Q2020. The combination of domestic and global economic weakness triggered by the Covid-19 outbreak resulted in BNM projecting Malaysia’s 2020 GDP growth to be between -2% and 0.5% vs government’s earlier forecast of 4.3%-4.8%.)

In order to support the economy, the government announced 3 stimulus packages with a combined value of RM 315 billion. An initial RM 20 billion package was announced by the Pakatan Harapan government, followed by the RM 260 billion “PRIHATIN” package and the RM 35 billion short-term “PENJANA” package. The stimulus packages are expected to result in an additional government spending of around RM 50 billion and the fiscal deficit for 2020 is now forecasted to be around 5.8%-6.0% of GDP, vs the 3.2% of GDP forecast at the start of the year.



Despite additional measures introduced by BNM to deepen and broaden the onshore financial market, FTSE Russell still maintained Malaysia in its watchlist for exclusion from World Government Bond Index (“WGBI”) in March 2020, citing expectation for continued discussion with BNM as well as the index users. The next index review is slated to be in September 2020.

Malaysia sovereign bond yields bull steepened during the period with short tenor bond yields down on the back of BNM rate cuts whilst longer tenor yields were stickier due to concerns of a larger fiscal deficit, global risk off sentiment and weaker ringgit. 3-, 5-, 10- and 15-years MGS changed by -73bps, -69bps, -44ps and -31bps to close at 2.25%, 2.46%, 2.86%, and 3.29% respectively. Similarly, MGII yield curve shifted steeper, as 3-, 5-, 10- and 15-year yields changed by -75bps, -66bps, -55bps and -31bps to end at 2.31%, 2.53%, 2.87% and 3.41%, respectively. Corporate bond yields generally moved in tandem with sovereign bond yields, albeit at a lag. Major primary corporate issuances during the period were mainly government guaranteed bonds and highly rated corporates bonds.

REBATES AND SOFT COMMISSIONS

During the period under review, the Manager and its delegates (if any) did not receive any soft commissions from stockbrokers.


Interim Report

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EASTSPRING INVESTMENTS BOND FUNDUNAUDITED FINANCIAL STATEMENTSFOR THE SIX MONTHS FINANCIAL PERIOD ENDED 30 JUNE 2020


Interim Report

STATEMENT BY THE MANAGER

We, Tang Chee Kin and Iskander Bin Ismail Mohamed Ali, being two of the Directors of Eastspring Investments Berhad, do hereby state that, in the opinion of the Manager, the accompanying unaudited financial statements set out on pages 14 to 54 are drawn up in accordance with the provisions of the Deed and give a true and fair view of the financial position of the Fund as at 30 June 2020 and of its financial performance, changes in equity and cash flows for the six months financial period ended on that date in accordance with the Malaysian Financial Reporting Standards and International Financial Reporting Standards.

For and on behalf of the Manager,EASTSPRING INVESTMENTS BERHAD

TANG CHEE KINExecutive Director/Chief Executive Officer

ISKANDER BIN ISMAIL MOHAMED ALI Independent, Non-Executive Director

Kuala LumpurDate: 14 August 2020



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

We have acted as Trustee for Eastspring Investments Bond Fund (the “Fund”) for financial period ended 30 June 2020. To the best of our knowledge, for the financial period under review, Eastspring Investments Berhad (the “Manager”) has operated and managed the Fund in accordance with the following:-

a. limitations imposed on the investment powers of the Manager under the Deed(s), the Securities Commission’s Guidelines on Unit Trust Funds, the Capital Markets and Services Act 2007 and other applicable laws;

b. valuation and pricing for the Fund is carried out in accordance with the Deed(s) of the Fund and any regulatory requirements; and

c. creation and cancellation of units for the Fund are carried out in accordance with the Deed(s) of the Fund and any regulatory requirements.

For Deutsche Trustees Malaysia Berhad

Ng Hon Leong Richard Lim Hock Seng Head, Trustee Operations Chief Executive Officer

Kuala LumpurDate: 14 August 2020


Interim Report

UNAUDITED STATEMENT OF COMPREHENSIVE INCOMEFOR THE SIX MONTHS FINANCIAL PERIOD ENDED 30 JUNE 2020

Note

6-months financial

period ended

30.6.2020

6-months financial

period ended

30.6.2019

RM RM

INVESTMENT INCOMEInterest income from deposits with licensed financial institutions 340,544 224,662Interest income from unquoted fixed income securities 4,930,245 4,489,333 Net gain on financial assets at fair value through profit or loss 6 504,131 4,269,515

5,774,920 8,983,510

EXPENSESManagement fee 3 (1,326,122) (1,010,652) Trustee fee 4 (106,090) (80,852) Audit fee (3,979) (3,968) Tax agent fee (1,691) (1,687) Other expenses (15,791) (16,561)

(1,453,673) (1,113,720)

PROFIT BEFORE TAXATION 4,321,247 7,869,790

TAXATION 5 - -

PROFIT AFTER TAXATION AND TOTAL COMPREHENSIVE INCOME 4,321,247 7,869,790

Profit after taxation is made up of the following: Realised amount 4,248,378 4,093,573 Unrealised amount 72,869 3,776,217

4,321,247 7,869,790

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



UNAUDITED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2020

Note 2020 2019

RM RM

ASSETSCash and cash equivalents 7 71,259,937 19,710,213Amount due from Manager 1,802,707 15,371,695Other receivable 9,483 9,483Financial assets at fair value through profit or loss 6 245,653,110 208,634,549TOTAL ASSETS 318,725,237 243,725,940

LIABILITIESAmount due to Manager 3,863,608 1,079,235Accrued management fee 256,210 171,948Amount due to brokers - 17,796,068Amount due to Trustee 20,497 13,756Other payables and accruals 24,166 23,068TOTAL LIABILITIES 4,164,481 19,084,075

NET ASSET VALUE OF THE FUND 314,560,756 224,641,865

EQUITYUnit holders’ capital 258,631,657 173,353,710Retained earnings 55,929,099 51,288,155

NET ASSET ATTRIBUTABLE TO UNIT HOLDERS 314,560,756 224,641,865

NUMBER OF UNITS IN CIRCULATION 8 457,035,474 330,322,608

NET ASSET VALUE PER UNIT (RM) 0.6883 0.6799



Interim Report

UNAUDITED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 30 JUNE 2020

Unit holders’ capital

Retained earnings Total

RM RM RM

Balance as at 1 January 2020 173,916,305 51,607,852 225,524,157

Movement in unit holders’ contribution:

Creation of units from applications 258,758,590 - 258,758,590

Cancellation of units (174,043,238) - (174,043,238)Total comprehensive income for the financial period - 4,321,247 4,321,247

Balance as at 30 June 2020 258,631,657 55,929,099 314,560,756

Balance as at 1 January 2019 164,342,226 43,418,365 207,760,591

Movement in unit holders’ contribution:

Creation of units from applications 81,583,890 - 81,583,890

Cancellation of units (72,572,406) - (72,572,406) Total comprehensive income for the financial period - 7,869,790 7,869,790

Balance as at 30 June 2019 173,353,710 51,288,155 224,641,865




UNAUDITED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 30 JUNE 2020

Note

6-months financial

period ended 30.6.2020

6-months financial

period ended 30.6.2019

RM RM

CASH FLOWS FROM OPERATING ACTIVITIES

Proceeds from sale of investments 34,876,736 48,596,539Purchase of investments (71,644,900) (43,513,758)Interest received from deposits with licensed financial institutions 340,544 224,662Interest received from unquoted fixed

income securities 4,981,030 4,354,794Management fee paid (1,254,980) (1,010,951)Trustee fee paid (100,398) (80,876)Payment for other fees and expenses (23,179) (24,426)Net cash (used in)/generated from operating

activities (32,825,147) 8,545,984

CASH FLOWS FROM FINANCING ACTIVITIES

Cash proceeds from units created 262,655,942 70,145,925Payments for cancellation of units (170,513,319) (72,300,798)Distribution paid - (214,449)Net cash generated from/(used in) financing

activities 92,142,623 (2,369,322)

NET INCREASE IN CASH AND CASH EQUIVALENTS 59,317,476 6,176,662

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE FINANCIAL PERIOD 11,942,461 13,533,551

CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL PERIOD 7 71,259,937 19,710,213



Interim Report

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

A. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

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

The preparation of financial statements in conformity with the MFRS and IFRS requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported financial period. It also requires the Manager to exercise their judgment in the process of applying the Fund’s accounting policies. Although these estimates and judgment are based on the Manager’s best knowledge of current events and actions, actual results may differ.

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

a. Standards, amendments that have been issued and effective:

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 financial statements for general purposes make on the basis of those financial statements, which provide financial information about a specific reporting entity.”

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESFOR THE SIX MONTHS FINANCIAL PERIOD ENDED 30 JUNE 2020



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 has the similar effect 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 financial statements for general purpose’ to whom those financial statements are directed, by defining them as ‘existing and potential investors, lenders and other creditors’ that must rely on financial statements for much of the financial information they need.

The amendments shall be applied prospectively.

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

B. INCOME RECOGNITION

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

Interest income from unquoted fixed income securities including amortisation of premium and accretion of discount are recognised using the effective interest method.

Gain or loss on disposal of unquoted fixed income securities is accounted for as the difference between the net disposal proceeds and the carrying amount of the investments, which is determined on cost adjusted for accretion of discount and amortisation of premium.

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).


Interim Report

C. TAXATION

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

D. 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.

E. FINANCIAL ASSETS AND FINANCIAL LIABILITIES

i. 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 flow characteristics of the financial assets. The portfolio of financial assets is managed and performance is evaluated on a fair value basis. The Fund is primarily focused on fair value information and uses that information to assess the assets’ performance and to make decisions. The 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.

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

ii. Recognition and measurement

Regular purchases and sales of financial assets are recognised on the trade date, the date on which the Fund commits to purchase or sell the asset. Investments are initially recognised at fair value. Transaction costs are expensed in the statement of comprehensive income.

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

Financial liabilities are recognised in the statement of financial position when, and only when, the Fund becomes a party to the contractual provisions of the financial instrument.

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

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

Deposits with licensed financial institutions are stated at cost plus accrued interest calculated on the effective interest method over the period from the date of placement to the date of maturity of the respective deposits.

Unquoted fixed income securities are revalued on a daily basis based on fair value prices quoted by a bond pricing agency (“BPA”) registered with the Securities Commission as per the Securities Commission Guidelines on Unit Trust Funds. Refer to Note I to the financial statements for further explanation.

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


Interim Report

iii. Impairment for assets carried at amortised costs

The Fund measures credit risk and expected credit losses using probability of default, exposure at default and loss given default. Management considers both historical analysis and forward looking information in determining any expected credit loss. Management consider the probability of default to be close to zero as these instruments have a low risk of default and the counterparties have a strong capacity to meet their contractual obligations in the near term. As a result, no loss allowance has been recognised based on 12 months expected credit losses as any such impairment would be wholly insignificant to the Fund.

Significant increase in credit risk

A significant increase in credit risk is defined by management as any contractual payment which is more than 30 days past due.

Definition of default and credit-impaired financial assets

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

Write-off

The Fund writes off financial assets, in whole or in part, when it has exhausted all practical recovery efforts and has concluded that there is no reasonable expectation of recovery. The assessment of no reasonable expectation of recovery is based on unavailability of debtor’s sources of income or assets to generate sufficient future cash flows to repay the amount. The Fund may write-off financial assets that are still subject to enforcement activity. Subsequent recoveries of amounts previously written off will result in impairment gains. There are no write-offs/recoveries during the financial period.



F. CASH AND CASH EQUIVALENTS

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

G. UNIT HOLDERS’ CAPITAL

The unit holders’ contributions to the Fund meet the criteria to be classified as equity instruments under MFRS 132 “Financial Instruments: Presentation”. Those criteria include:

• the units entitle the holder to a proportionate share of the Fund’s net assets value;

• the units are the most subordinated class and class features are identical;• there is no contractual obligations to deliver cash or another financial asset other

than the obligation on the Fund to repurchase; and• the total expected cash flows from the units over its life are based substantially

on the profit or loss of the Fund.

The outstanding units are carried at the redemption amount that is payable at each financial period if unit holder exercises the right to put the unit back to the Fund.

Units are created and cancelled at prices based on the Fund’s net asset value per unit at the time of creation or cancellation. The Fund’s net asset value per unit is calculated by dividing the net assets attributable to unit holders with the total number of outstanding units.


Interim Report

H. AMOUNTS DUE FROM/(TO) BROKERS

Amounts due from and to brokers represent receivables for securities sold and payables for securities purchased that have been contracted for but not yet settled or delivered on the statement of financial position date respectively. The amount due from brokers balance is held for collection.

These amounts are recognised initially at fair value and subsequently measured at amortised cost. At each reporting date, the Fund shall measure the loss allowance on amounts due from broker at an amount equal to the lifetime expected credit losses if the credit risk has increased significantly since initial recognition. If, at the reporting date, the credit risk has not increased significantly since initial recognition, the Fund shall measure the loss allowance at an amount equal to 12 months expected credit losses. Significant financial difficulties of the broker, probability that the broker will enter bankruptcy or financial reorganisation, and default in payments are all considered indicators that a loss allowance may be required.

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

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



I. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS IN APPLYING ACCOUNTING POLICIES

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

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

a. Estimate of fair value of unquoted fixed income securities

The Fund uses significant judgment in determining whether an investment is impaired. The Fund evaluates, among other factors, the duration and extent to which the fair value of the investment is less than cost, and the financial health and near-term business outlook for the investee, including factors such as industry and sector performance, macroeconomic factors and speculation.

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 valuation guidelines.

Unquoted fixed income securities are valued using fair value prices quoted by a bond pricing agency (“BPA”). Where the Manager is of the view that the price quoted by BPA for a specific bond differs from the market price by more than 20 basis points, the Manager may use the market price, provided that the Manager records its basis for using a non-BPA price, obtains necessary internal approvals to use the non-BPA price, and keeps an audit trail of all decisions and basis for adopting the use of non-BPA price. This is allowed for under the Securities Commission (“SC”) Guidelines on Unit Trust Funds.


Interim Report

1. INFORMATION ON THE FUND

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

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

The Fund seeks to provide investors with a steady stream of income returns by investing principally in a portfolio of investment-grade fixed income securities with exposure in non-investment grade fixed income securities which yield above average returns.

All investments will be subjected to the Securities Commission’s (“SC”) Guidelines on Unit trust Fund, the SC requirement, the Deed, except where exemptions or variations have been approved by the SC, internal policies and procedures and the Fund’s objective.

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

NOTES TO THE UNAUDITED FINANCIAL STATEMENTSFOR THE SIX MONTHS FINANCIAL PERIOD ENDED 30 JUNE 2020



2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

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

Financial risk management is carried out through internal control processes adopted by the Manager and adherence to the investment restrictions as stipulated in the Deed.

Financial instruments of the Fund are as follows:

Note

Financial assets at

amortised cost

Financial assets at fair

value through profit or loss Total

RM RM RM

2020

Cash and cash equivalents 7 71,259,937 - 71,259,937 Amount due from Manager 1,802,707 - 1,802,707 Other receivable 9,483 - 9,483 Unquoted fixed income securities

6- 245,653,110 245,653,110

73,072,127 245,653,110 318,725,237

2019

Cash and cash equivalents 7 19,710,213 - 19,710,213Amount due from Manager 15,371,695 - 15,371,695Other receivable 9,483 - 9,483Unquoted fixed income securities

6- 208,634,549 208,634,549

35,091,391 208,634,549 243,725,940

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


Interim Report

Market risk

i. Price risk

Price risk is the risk that the fair value of the Bond fund investment in unquoted fixed income securities will fluctuate because of changes in market prices (other than those arising from interest rate risk). The value of investments may fluctuate according to the activities of individual companies, sector and overall political and economic conditions. Such fluctuation may cause the Fund’s net asset value and prices of units to fall as well as rise, and income produced by the Fund may also fluctuate.

The price risk is managed through diversification and asset allocation whereby the unquoted fixed income securities exposure will be reduced in the event of anticipated market weakness.

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

2020 2019

RM RM

Unquoted fixed income securities designated at fair value through profit or loss* 245,653,110 208,634,549

* Includes interest receivables of RM3,068,351 (2019: RM2,791,925).



The table below summarises the sensitivity of the Fund’s profit after tax and net asset value to movements in valuation of unquoted fixed income securities at the end of each reporting financial period. The analysis is based on the assumptions that the valuation of the unquoted fixed income securities increased and decreased by 5% with all other variables held constant. This represents management’s best estimate of a reasonable possible shift in the unquoted fixed income securities, having regard to the historical volatility of the prices.

% Change in priceMarket

value

Increase/(decrease) in profit after tax

and net asset value

RM RM

2020

+5% 254,713,997 12,129,238 -5% 230,455,521 (12,129,238)

2019

+5% 216,134,755 10,292,131-5% 195,550,493 (10,292,131)

ii. Interest rate risk

In general, when interest rates rise, unquoted fixed income securities prices will tend to fall and vice versa. Therefore, the NAV of the Fund may also tend to fall when interest rates rise or are expected to rise. However, investors should be aware that should the Fund holds an unquoted fixed income securities till maturity, such price fluctuations would dissipate as it approaches maturity, and thus the growth of the NAV shall not be affected at maturity. In order to mitigate interest rates exposure of the Fund, the Manager will manage the duration of the portfolio via shorter or longer tenured assets depending on the view of the future interest rate trend of the Manager, which is based on its continuous fundamental research and analysis.

Investors should note that the movement in prices of unquoted fixed income securities and money market instruments are benchmarked against interest rates. As such, the investments are exposed to the movement of the interest rates.


Interim Report

This risk is crucial since unquoted fixed income securities portfolio management depends on forecasting interest rate movements. Prices of unquoted fixed income securities move inversely to interest rate movements, therefore as interest rates rise, the prices of unquoted fixed income securities decrease and vice versa. Furthermore, unquoted fixed income securities with longer maturity and lower yield coupon rates are more susceptible to interest rate movements.

Such investments may be subject to unanticipated rise in interest rates which may impair the ability of the issuers to make payments of interest income and principal, especially if the issuers are highly leveraged. An increase in interest rates may therefore increase the potential for default by an issuer.

The table below summarises the sensitivity of the Fund’s profit after tax and net asset value to movements in interest rate for investments at the end of each reporting financial period as a result of movement in interest rate. The analysis is based on the assumptions that the interest rate changed by 1% (2019: 1%) with all other variables held constant. This represents management’s best estimate of a reasonable possible shift in the interest rate, having regard to the historical volatility of the interest rate.

2020 2019

% Movement in interest rate

Impact on profit after tax/

change in net asset value

Impact on profit after tax/

change in net asset value

RM RM

Unquoted fixed income securities

+1% (2019: +1%) (659,076) (499,934) -1% (2019: -1%) 662,599 502,437



Liquidity risk

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

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

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

Less than1 month

Between1 monthto 1 year Total

RM RM RM

2020

Amount due to Manager 3,863,608 - 3,863,608 Accrued management fee 256,210 - 256,210 Amount due to Trustee 20,497 - 20,497 Other payables and accruals - 24,166 24,166 Contractual cash outflows 4,140,315 24,166 4,164,481


Interim Report

Less than1 month

Between1 monthto 1 year Total

RM RM RM

2019

Amount due to Manager 1,079,235 - 1,079,235Accrued management fee 171,948 - 171,948Amount due to brokers 17,796,068 - 17,796,068Amount due to Trustee 13,756 - 13,756Other payables and accruals - 23,068 23,068Contractual cash outflows 19,061,007 23,068 19,084,075

Credit/Default risk

Credit risk refers to the ability of an issuer or a counter party to make timely payments of interest, principals and proceeds from realisation of investments. In the case of the Fund, both the Manager and the External Fund Manager regularly reviews the ratings assigned to the Issuer so that the necessary steps can be taken if the ratings fall below those prescribed by the SC.

The credit risk arising from placements of deposits with licensed financial institutions is managed by ensuring that the Fund will only place deposits with reputable licensed financial institutions. The settlement terms of the proceeds from the creation of units receivable from the Manager are governed by the SC’s Guidelines on Unit Trust Funds.



The following table sets out the credit risk concentration and counterparties of the Fund.

Financial assets at

fair value through

profit or loss

Cash and cash

equivalentsOther

receivable

Amount due from Manager Total

RM RM RM RM RM

2020Finance- AAA - 71,213,991 - - 71,213,991 - AA1 - 45,946 - - 45,946 Unquoted fixed

income securities- A1 28,425,683 - - - 28,425,683 - A+ IS 8,278,209 - - - 8,278,209 - AA1 11,717,654 - - - 11,717,654 - AA- IS 21,510,687 - - - 21,510,687 - AA2 7,175,081 - - - 7,175,081 - AA3 35,850,737 - - - 35,850,737 - AAA 42,119,856 - - - 42,119,856 - AAA (S) 14,189,950 - - - 14,189,950 - AAA IS 5,587,826 - - - 5,587,826 - C IS 280,956 - - - 280,956 - NR 70,516,471 - - - 70,516,471 Other- NR - - 9,483 1,802,707 1,812,190

245,653,110 71,259,937 9,483 1,802,707 318,725,237


Interim Report

Financial assets at

fair value through

profit or loss

Cash and cash

equivalentsOther

receivable

Amount due from Manager Total

RM RM RM RM RM

2019Finance- AAA - 19,604,994 - - 19,604,994- AA1 - 105,219 - - 105,219Unquoted fixed

income securities- A1 27,156,066 - - - 27,156,066- A+ IS 8,112,305 - - - 8,112,305- AA1 28,311,706 - - - 28,311,706- AA- IS 21,359,856 - - - 21,359,856- AA2 11,166,381 - - - 11,166,381- AA2 (S) 3,067,279 - - - 3,067,279- AA3 39,758,135 - - - 39,758,135- AAA 17,436,531 - - - 17,436,531- AAA (S) 3,635,831 - - - 3,635,831- AAA IS 5,317,376 - - - 5,317,376- C IS 288,000 - - - 288,000 - NR 43,025,083 - - - 43,025,083Other- NR - - 9,483 15,371,695 15,381,178

208,634,549 19,710,213 9,483 15,371,695 243,725,940

None of these assets are past due or impaired

Fund management risk

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



Non-compliance risk

Non-compliance risk arises when the Manager and others associated with the Fund do not comply to the rules set out in the Fund’s constitution or the laws that govern the Fund or applicable internal control procedures, or acts of fraudulence or dishonesty.

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

Capital risk

The capital of the Fund is represented by equity consisting of unit holders’ capital of RM258,631,657 (2019: RM173,353,710) and retained earnings of RM55,929,099 (2019: RM51,288,155). The amount of equity can change significantly on a daily basis as the Fund is subject to daily subscriptions and redemptions at the discretion of unit holders. The Fund’s objective when managing capital is to safeguard the Fund’s ability to continue as a going concern in order to provide returns for unit holders and benefits for other stakeholders and to maintain a strong capital base to support the development of the investment activities of the Fund.

Fair value estimation

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e. an exit price).

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

bid-ask spread that is representative of the fair value.

An active market is a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

The fair value of financial assets that are not traded in an active market is determined by using valuation techniques.


Interim Report

Fair value hierarchy

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

• Level 1: Quoted prices (unadjusted) in active market for identical assets or liabilities.

• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).

• Level 3: Inputs for the asset and liability that are not based on observable market data (that is, unobservable inputs).

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

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

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



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

Level 1 Level 2 Level 3 Total

RM RM RM RM

2020Financial assets at fair value through profit or loss: Unquoted fixed income securities - 245,653,110 - 245,653,110

2019Financial assets at fair value through profit or loss: Unquoted fixed income securities - 208,634,549 - 208,634,549

Financial instruments that trade in markets that are 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 which include unquoted fixed income securities. 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 these financial assets are stated in Note E to the financial statements.

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


Interim Report

3. MANAGEMENT FEE

In accordance with the Deed, the Manager is entitled to a management fee at a rate not exceeding 2.00% per annum on the net asset value of the Fund calculated on daily basis.

For the financial period ended 30 June 2020, the management fee is recognised at a rate of 1.00% (2019: 1.00%) per annum on the net asset value of the Fund, calculated on daily basis.

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

4. TRUSTEE FEE

In accordance with the Deed, the Trustee is entitled to an annual fee at a rate not exceeding 0.20% per annum on the net asset value of the Fund, subject to a minimum fee of RM30,000 per annum.

For the financial period ended 30 June 2020, the Trustee fee is recognised at a rate of 0.08% (2019: 0.08%) per annum on the net asset value of the Fund, inclusive of local custodian fee, calculated on daily basis.

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

5. TAXATION

6-months financial period

ended 30.6.2020


ended 30.6.2019

RM RM

Tax charged for the financial period: Current taxation – local - -



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


ended 30.6.2020


ended 30.6.2019

RM RM

Profit before taxation 4,321,247 7,869,790

Tax at Malaysian statutory rate of 24% (2019: 24%) 1,037,099 1,888,750

Tax effects of: Investment income exempt from tax (1,385,980) (2,156,042) Expenses not deductible for tax purposes 29,657 23,784 Restriction on tax deductible expenses for Unit Trust Funds 319,224 243,508

Taxation - -

6. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

2020 2019

RM RM

Designated at fair value through profit or loss: Unquoted fixed income securities 245,653,110 208,634,549

Net gain on financial assets at fair value through profit or loss: Realised gain on disposals 431,262 493,298 Change in unrealised fair value gain 72,869 3,776,217

504,131 4,269,515


Interim Report

Name of counterNominal

valueAggregate

cost

Fair value as at

30.6.2020

Percentage of net asset value of the

Fund

RM RM RM %

5.03% Affin Bank Berhad 20.09.2022 (A1) 7,000,000 7,099,360 7,334,070 2.335.45% Affin Bank Berhad 07.02.2022 (A1) 20,000,000 20,559,871 21,091,613 6.715.23% Ambank (M) Berhad 14.03.2023 (AA3) 5,000,000 5,076,449 5,337,149 1.705.20% Ambank (M) Berhad 15.03.2022 (AA3) 5,000,000 5,076,011 5,252,411 1.675.20% Ambank Islamic Berhad 15.03.2022 (AA3) 2,000,000 2,030,404 2,100,964 0.674.98% Bank Pembangunan Malaysia Berhad 02.03.2032 (AAA) 5,000,000 5,648,135 5,738,522 1.824.92% BGSM Management Sdn Berhad 29.08.2025 (AA3) 3,200,000 3,258,716 3,490,030 1.114.10% Bumitama Agri Ltd 22.07.2024 (AA3) 3,000,000 3,054,255 3,136,965 1.004.53% Danainfra Nasional Berhad 01.04.2037 (NR) 6,000,000 6,067,764 6,697,764 2.135.17% Danainfra Nasional Berhad 26.11.2048 (NR) 5,000,000 6,476,811 5,912,688 1.88




valueAggregate

cost

Fair value as at

30.6.2020


Fund

RM RM RM %

5.06% Danainfra Nasional Berhad 12.02.2049 (NR) 5,000,000 6,005,647 5,890,841 1.874.38% Genting RMTN Berhad 08.11.2034 (AAA (S)) 3,000,000 3,019,440 3,088,140 0.984.895% Government of Malaysia 08.05.2047 (NR) 5,000,000 5,440,566 5,788,014 1.844.921% Government of Malaysia

06.07.2048 (NR) 7,500,000 9,557,117 8,789,393 2.794.467% Government of Malaysia

15.09.2039 (NR) 10,000,000 11,714,136 11,141,097 3.544.119% Government of Malaysia

30.11.2034 (NR) 5,000,000 5,502,064 5,417,444 1.725.10% Gulf Investment Corporation

G.S.C 20.06.2022 (AAA) 5,000,000 5,116,499 5,184,232 1.653.85% Hong Leong Assurance Berhad

31.01.2030 (AA3) 4,200,000 4,266,009 4,335,057 1.389.30% Jimah Energy Ventures Sdn Berhad

12.11.2021 (AA3) 2,800,000 3,000,370 3,069,964 0.98


Interim Report


valueAggregate

cost

Fair value as at

30.6.2020


Fund

RM RM RM %

5.10% Kimanis Power Sdn Berhad

08.08.2024 (AA- IS) 1,000,000 1,026,102 1,082,111 0.345.10% Krung Thai Bank Public Company

Limited 06.07.2020 (AA2) 7,000,000 7,173,029 7,175,081 2.284.00% Kuala Lumpur Kepong Berhad

02.09.2022 (AA1) 3,000,000 3,045,115 3,108,812 0.995.44% Lebuhraya Duke Fasa 3 Sdn Berhad

23.08.2029 (AA- IS) 5,000,000 5,337,168 5,457,486 1.735.24% Lebuhraya Duke Fasa 3 Sdn Berhad

23.08.2027 (AA- IS) 10,800,000 11,260,840 11,639,332 3.704.90% Manjung Island Energy Berhad

25.11.2031 (AAA (S)) 1,450,000 1,625,760 1,649,286 0.524.74% Manjung Island Energy Berhad

23.11.2029 (AAA) 5,000,000 5,486,133 5,581,276 1.773.32% Pengurusan Air SPV Berhad

04.06.2027 (AAA) 5,000,000 5,011,825 5,035,475 1.604.54% Pengurusan Air SPV Berhad

23.02.2029 (AAA) 5,000,000 5,078,984 5,521,484 1.76




valueAggregate

cost

Fair value as at

30.6.2020


Fund

RM RM RM %

4.50% Perbadanan Kemajuan

Negeri Selangor 31.05.2022 (AA3) 4,000,000 4,068,809 4,118,094 1.31

4.58% Perbadanan Tabung Pendidikan

Tinggi Nasional 28.02.2034 (NR) 10,000,000 10,151,830 11,280,030 3.594.90% Perbadanan Tabung Pendidikan


Tinggi Nasional 17.08.2032 (NR) 4,000,000 4,076,954 4,667,097 1.483.80% Prasarana Malaysia Berhad 25.02.2050 (NR) 1,500,000 1,519,833 1,429,713 0.45

5.11% Quantum Solar Park (Semenanjung)

Sdn Berhad 06.04.2022 (A+ IS) 3,000,000 3,044,077 3,095,520 0.985.16% Quantum Solar Park (Semenanjung)

Sdn Berhad 06.10.2022 (A+ IS) 5,000,000 5,077,407 5,182,689 1.655.05% Rantau Abang Capital Berhad

12.05.2031 (AAA (S)) 5,000,000 5,501,891 5,736,307 1.82


Interim Report


valueAggregate

cost

Fair value as at

30.6.2020


Fund

RM RM RM %

3.35% RHB Bank Berhad 28.05.2030 (AA3) 5,000,000 5,015,603 5,010,103 1.594.95% Sarawak Energy Berhad 25.11.2033

(AAA) 5,000,000 5,023,733 5,751,583 1.835.32% Sarawak Energy Berhad 03.12.2032

(AAA) 3,000,000 3,023,948 3,561,539 1.135.09% Southern Power Generation Sdn Berhad

30.04.2029 (AA- IS) 3,000,000 3,025,938 3,331,758 1.069.00% Talam Transform Berhad

28.12.2020 (C IS) 290,095 290,371 280,956 0.094.78% Tenaga Nasional Berhad

29.08.2033 (AAA) 5,000,000 5,403,370 5,745,745 1.834.795% TNB Northern Energy Berhad

29.11.2035 (AAA IS) 5,000,000 5,304,796 5,587,826 1.784.65% Toyota Capital Malaysia Sdn Berhad

24.01.2023 (AAA (S)) 3,500,000 3,573,784 3,716,217 1.18




valueAggregate

cost

Fair value as at

30.6.2020


Fund

RM RM RM %

4.80% United Overseas Bank (Malaysia) Berhad

25.07.2023 (AA1) 5,000,000 5,101,918 5,324,818 1.695.05% YTL Power International Berhad

03.05.2027 (AA1) 3,000,000 3,161,438 3,284,024 1.04

TOTAL UNQUOTED FIXED INCOME

SECURITIES 225,240,095 238,451,983 245,653,110 78.07

ACCUMULATED UNREALISED GAIN ON FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 7,201,127

FAIR VALUE OF FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 245,653,110


Interim Report


valueAggregate

cost

Fair value as at

30.6.2019


Fund

RM RM RM %

5.03% Affin Bank Berhad 20.09.2027 (A1) 7,000,000 7,099,360 7,231,310 3.22 5.45% Affin Bank Berhad 05.02.2027 (A1) 19,000,000 19,567,289 19,924,756 8.87 5.20% Ambank (M) Berhad

15.03.2027 (AA3) 5,000,000 5,076,932 5,195,732 2.315.23% Ambank (M) Berhad

14.03.2028 (AA3) 5,000,000 5,078,092 5,228,392 2.335.20% Ambank Islamic Berhad

15.03.2027 (AA3) 2,000,000 2,030,773 2,078,293 0.93 4.92% BGSM Management Sdn Bhd

29.08.2025 (AA3) 3,200,000 3,259,192 3,362,783 1.505.25% BGSM Management Sdn Bhd

24.12.2020 (AA3) 2,200,000 2,215,734 2,241,253 1.004.53% Danainfra Nasional Berhad 01.04.2037 (NR) 6,000,000 6,067,764 6,404,544 2.85

4.895% Government of Malaysia 08.05.2047 (NR) 11,450,000 12,478,283 12,489,842 5.56

5.10% Gulf Investment Corporation

G.S.C 16.03.2021 (AAA) 5,000,000 5,088,971 5,125,706 2.28 4.50% Hong Leong Assurance Berhad

07.02.2025 (AA3) 3,000,000 3,051,092 3,059,800 1.36




valueAggregate

cost

Fair value as at

30.6.2019


Fund

RM RM RM %

9.05% Jimah Energy Ventures Sdn Berhad

12.11.2020 (AA3) 2,500,000 2,667,458 2,701,576 1.209.30% Jimah Energy Ventures Sdn Berhad

12.11.2021 (AA3) 2,800,000 3,115,278 3,167,892 1.415.10% Kimanis Power Sdn Berhad

08.08.2024 (AA- IS) 1,000,000 1,027,597 1,063,451 0.475.10% Krung Thai Bank Public Company Limited

04.07.2025 (AA2) 7,000,000 7,174,148 7,230,314 3.224.00% Kuala Lumpur Kepong Berhad

02.09.2022 (AA1) 3,000,000 3,047,152 3,055,323 1.365.24% Lebuhraya Duke Fasa 3 Sdn Berhad

23.08.2027 (AA- IS) 10,800,000 11,287,965 11,580,071 5.155.44% Lebuhraya Duke Fasa 3 Sdn Berhad

23.08.2029 (AA- IS) 5,000,000 5,356,386 5,452,496 2.438.20% Mukah Power Generation

Sdn Berhad 27.12.2019 (AA2 (S)) 3,000,000 3,054,457 3,067,279 1.37

4.75% Northern Gateway Infrastructure Sdn Berhad 29.08.2022 (AA1) 3,000,000 3,054,957 3,114,981 1.39


Interim Report


valueAggregate

cost

Fair value as at

30.6.2019


Fund

RM RM RM %

4.54% Pengurusan Air SPV Berhad

23.02.2029 (AAA) 5,000,000 5,078,362 5,288,462 2.354.50% Perbadanan Kemajuan Negeri Selangor

31.05.2022 (AA3) 4,000,000 4,094,356 4,043,090 1.804.58% Perbadanan Tabung Pendidikan



Tinggi Nasional 21.01.2033 (NR) 8,000,000 8,191,178 8,919,516 3.974.85% Public Bank Berhad

23.04.2027 (AA1) 5,000,000 5,044,514 5,149,414 2.295.11% Quantum Solar Park (Semenanjung)

Sdn Berhad 06.04.2022 (A+ IS) 3,000,000 3,047,585 3,042,630 1.355.16% Quantum Solar Park (Semenanjung)

Sdn Berhad 06.10.2022 (A+ IS) 5,000,000 5,082,939 5,069,675 2.26




valueAggregate

cost

Fair value as at

30.6.2019


Fund

RM RM RM %

4.75% RHB Bank Berhad 08.05.2025 (AA3) 3,000,000 3,021,082 3,038,122 1.354.99% RHB Bank Berhad 08.07.2024 (AA3) 3,000,000 3,071,421 3,072,024 1.375.32% Sarawak Energy Berhad

03.12.2032 (AA1) 3,000,000 3,023,798 3,337,494 1.494.95% Sarawak Energy Berhad 25.11.2033 (AA1) 5,000,000 5,023,733 5,386,983 2.40

5.09% Southern Power Generation Sdn Berhad

30.04.2029 (AA- IS) 3,000,000 3,025,938 3,263,838 1.459.00% Talam Transform Berhad 28.12.2020 (C IS) 330,940 330,960 288,000 0.13

5.02% Tanjung Bin Energy Issuer Berhad

15.09.2020 (AA3) 2,500,000 2,544,125 2,569,178 1.144.58% Telekom Malaysia Berhad 03.09.2027 (AAA) 1,500,000 1,529,364 1,590,123 0.71

4.78% Tenaga Nasional Berhad

29.08.2033 (AAA) 5,000,000 5,420,854 5,432,240 2.424.795% TNB Northern Energy Berhad

29.11.2035 (AAA IS) 5,000,000 5,317,560 5,317,376 2.374.65% Toyota Capital Malaysia Sdn Berhad

24.01.2023 (AAA (S)) 3,500,000 3,574,414 3,635,831 1.62


Interim Report


valueAggregate

cost

Fair value as at

30.6.2019


Fund

RM RM RM %

4.63% UMW Holdings Berhad 22.06.2020 (AA2) 3,900,000 3,906,547 3,936,067 1.75

4.80% United Overseas Bank (Malaysia) Berhad 5,000,000 5,103,233 5,224,783 2.33

25.07.2028 (AA1)4.55% YTL Power International Berhad

10.06.2022 (AA1) 3,000,000 3,012,152 3,042,728 1.35

TOTAL UNQUOTED FIXED INCOME

SECURITIES 197,680,940 203,472,207 208,634,549 92.88

ACCUMULATED UNREALISED GAIN ON FINANCIAL ASSETS AT FAIR VALUE THROUGH

PROFIT OR LOSS 5,162,342

FAIR VALUE OF FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 208,634,549

The effective weighted average rate of return of unquoted fixed income securities per annum as at the date of the statement of financial position are as follows:

2020 2019

% %

Unquoted fixed income securities 3.75 4.23



7. CASH AND CASH EQUIVALENTS

2020 2019

RM RM

Bank balance with a licensed bank 45,946 105,219Deposit with a licensed financial institution 71,213,991 19,604,994

71,259,937 19,710,213

The effective weighted average interest rate of short-term deposits with licensed financial institutions per annum as at the date of statement of financial position are as follows:

2020 2019

% %

Deposit with a licensed financial institution 2.05 3.10

The deposits have an average maturity of 1 day (2019: 1 day).

8. UNITS IN CIRCULATION

2020 2019

No. of units No. of units

At the beginning of the financial period 334,964,354 317,519,376Creation of units arising from applications during the financial period 377,890,395 121,817,220Cancellation of units during the financial period (255,819,275) (109,013,988)At the end of the financial period 457,035,474 330,322,608


Interim Report

9. TRANSACTIONS WITH DEALERS

Details of transactions with the dealers are as follows:

Name of dealersValue of

trades

Percentage of total

tradesBrokerage

fees

Percentage of total

brokerage fees

RM % RM %

2020Maybank Islamic Berhad 42,379,341 39.78 - -Ambank (M) Berhad 15,620,500 14.66 - -RHB Investment Bank Berhad 12,157,100 11.41 - -Hong Leong Bank Berhad 10,380,000 9.74 - -Bank of America Malaysia Berhad 9,390,000 8.82 - -CIMB Bank Berhad 6,461,000 6.07 - -Standard Chartered Bank Malaysia Berhad 5,912,000 5.55 - -Hong Leong Investment Bank Berhad 4,200,000 3.94 - -Direct 21,695 0.03 - -

106,521,636 100.00 - -

2019Malayan Banking Berhad 22,394,625 21.69 - -Alliance Bank Malaysia Berhad 21,203,236 20.54 - -Hong Leong Bank Berhad 18,655,100 18.07 - -RHB Investment Bank Berhad 16,636,500 16.12 - -Ambank (M) Berhad 14,014,600 13.58 - -Standard Chartered Bank Malaysia Berhad 10,265,000 9.95 - -Other 46,786 0.05 - -

103,215,847 100.00 - -

All dealers highlighted above are not related to the Manager. There are no brokerage fees charged by the dealers for the financial period ended 30 June 2020 and 30 June 2019.



10. MANAGEMENT EXPENSE RATIO (“MER”)

2020 2019

% %

MER 0.55 0.55

MER is derived from the following calculation:

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

F

A = Management fee

B = Trustee fee

C = Audit fee

D = Tax agent fee

E = Other expenses

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

The average net asset value of the Fund for the financial period calculated on a daily basis is RM265,537,770 (2019: RM203,799,501).

11. PORTFOLIO TURNOVER RATIO (“PTR”)

2020 2019

PTR (times) 0.20 0.25

PTR is derived from the following calculation:

(Total acquisitions for the financial period + total disposals for the financial period) ÷ 2Average net asset value of the Fund for the financial period calculated on a daily basis

where: total acquisitions for the financial period = RM71,644,900 (2019: RM61,309,825) total disposals for the financial period = RM34,876,736 (2019: RM41,906,022)


Interim Report

12. UNITS HELD BY THE MANAGER

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

Related party Relationship

Eastspring Investments Berhad The Manager

2020 2019

No. of units RM No. of units RM

Eastspring Investments Berhad 1,469 1,011 1,411 959

The above units were transacted at the prevailing market price.

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

13. SIGNIFICANT EVENT DURING THE FINANCIAL PERIOD

The worsening macro-economic outlook as a result of Covid-19, both domestically and globally, has resulted in the deterioration of the Fund’s Net Asset Value/unit as of the date of this report. This is mainly due to the decrease in fair value of the Fund’s investments at fair value through profit or loss.

The Manager is monitoring the situation closely and will be actively managing the portfolio to achieve the Fund’s objective.

14. APPROVAL OF FINANCIAL STATEMENTS

The financial statements have been approved for issue by the Manager on 14 August 2020.




Interim Report

THE MANAGERNAME

EASTSPRING INVESTMENTS BERHAD

COMPANY NO.

200001028634 (531241-U)

REGISTERED OFFICE

Level 25, Menara Hong Leong

No. 6, Jalan Damanlela

Bukit Damansara

50490 Kuala Lumpur

BUSINESS OFFICE

Level 22, Menara Prudential

Persiaran TRX Barat

55188 Tun Razak Exchange

Kuala Lumpur

TELEPHONE NO.

603-2778 3888

FAX NO.

603-2789 7220

EMAIL

[email protected]

WEBSITE

www.eastspring.com/my

TRUSTEENAME

DEUTSCHE TRUSTEES MALAYSIA BERHAD

COMPANY NO.

763590-H

REGISTERED OFFICE & BUSINESS OFFICE

Level 20, Menara IMC

No. 8, Jalan Sultan Ismail

50250 Kuala Lumpur

TELEPHONE NO.

603-2053 7522

FAX NO.

603-2053 7526

SALE & PURCHASE OF UNITSEastspring Investments BerhadLevel 22, Menara Prudential

Persiaran TRX Barat

55188 Tun Razak Exchange

Kuala Lumpur

TELEPHONE NO.

603-2778 1000

CORPORATE DIRECTORY



BRANCHESPetaling JayaEastspring Investments Berhad

A-17-P1 & M

Block A, Jaya One

72A, Jalan Universiti

46200 Petaling Jaya, Selangor

TELEPHONE NO.

603-7948 1288

Kota KinabaluEastspring Investments Berhad

Suite E3, 9th Floor

CPS Tower, Centre Point Sabah

No. 1, Jalan Centre Point

88000 Kota Kinabalu, Sabah

TELEPHONE NO.

6088-238 613

ENQUIRIESCLIENT SERVICES

603-2778 1000

FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 30 JUNE 2020

INTERIM REPORT

EASTSPRING INVESTMENTSBOND FUND

Eastspring Investments Berhad 200001028634 (531241-U)Level 22, Menara Prudential, Persiaran TRX Barat55188 Tun Razak Exchange, Kuala LumpurT: (603) 2778 3888 F: (603) 2789 7220eastspring.com/my

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

eastspring investments bond fundbnm cut the overnight policy rate (“opr”) by 100 bps during the...

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