Eastspring Investments Dynamic Fund

EASTSPRING INVESTMENTS
DYNAMIC FUND

INTERIM REPORT

FOR THE SIX MONTHS FINANCIAL PERIOD
ENDED 31 DECEMBER 2019



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 31 December 2019.
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 1
3
Fund Information 6
Key Performance Data 9
Manager’s Report 12
Market Review 14
Rebates and Soft Commissions
Statement by the Manager 15
Trustee’s Report to the Unit Holders of 16
17
Eastspring Investments Dynamic Fund 18
Unaudited Statement of Comprehensive Income 19
Unaudited Statement of Financial Position 20
Unaudited Statement of Changes in Equity 28
Unaudited Statement of Cash Flows 62
Summary of Significant Accounting Policies
Notes to the Unaudited Financial Statements
Corporate Directory

Interim Report

FUND INFORMATION

Name of Fund Eastspring Investments Dynamic Fund (the “Fund“)
Fund Category/ Mixed asset/growth
Type
Fund Objective The Fund seeks to provide investors with capital appreciation
by actively investing in equity and equity-related securities. For
Performance defensive consideration, the Fund may invest in debentures and
Benchmark money market instruments.
Note: The Fund’s focus is on growth.
ANY MATERIAL CHANGES TO THE FUND’S OBJECTIVE
WOULD REQUIRE UNIT HOLDERS’ APPROVAL.

(a) If 100% of the Fund’s NAV invested in equities and equity-
related securities:
FTSE Bursa Malaysia 100 Index (“FBM100”).

(b) If 100% of the Fund’s NAV invested in debentures and liquid
assets:
Maybank 12-month fixed deposit rate

(c) If invested in a mix of equities and equity-related securities,
debentures and liquid assets:
50% FBM100 + 50% Maybank 12-month fixed deposit rate.

The composite benchmark index is a reflection of the Fund’s
average asset allocation over the long-term of 50% of the Fund’s
NAV in equities and equity-related securities, and 50% of the
Fund’s NAV in debentures and liquid assets.
Source:
FBM100 (www.bursamalaysia.com)
Maybank 12-month fixed deposit rate (www.maybank2u.com.my)
The performance of the Fund against the benchmark is published
in the Manager’s monthly factsheet and is available from the
Manager’s website at www.eastspring.com/my
Note: The risk profile of the Fund is different from the risk profile
of the performance benchmark.

Client Services : 03-2778 1000 1

Eastspring Investments Dynamic Fund

FUND INFORMATION (CONTINUED)

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

Distribution Policy

Breakdown of Unit As at 31 December 2019, the size of Eastspring Investments
Holdings by Size Dynamic Fund stood at 59.331 million units.

Fund Size

Units (Million) 80
70
60 Aug Sep Oct Nov Dec
50 2019 2019 2019 2019 2019
40
30
20
10

0 Jul
2019

Breakdown of Unit Holdings

Unit Holdings No. of No. of %
Unit Units*
% (‘000)
Holders

5,000 units and below 738 27.06 1,884 3.18
5,001 to 10,000 units 655 24.02 4,580 7.72
10,001 to 50,000 units 1,140 41.80 24,626 41.51
50,001 to 500,000 units 188 6.90 17,202 28.99
500,001 units and above 11,038 18.60
Total 6 0.22 59,330 100.00
2,727 100.00

* excludes units held by the Manager.

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KEY PERFORMANCE DATA

FOR THE FINANCIAL PERIOD ENDED 31 DECEMBER

Category 2019 2018 2017
(%) (%) (%)

Quoted securities 1.32 - 7.19
Construction - - 0.70
Consumer 17.86
Consumer Products & Services 14.77 2.08 -
Energy 2.83 28.30 -
Financial Services 8.73 3.06
Health Care 23.79 4.06 17.76
Industrial Products & Services 8.92 - 2.94
Manufacturing 3.17 4.28 1.03
Plantation - 0.04 -
Property 4.34 2.27 9.85
REITS 1.90 4.75 1.06
Technology 2.02 3.64 19.07
Telecommunications & Media 2.69 - -
Trading/Services 7.63 - 23.21
Transportation & Logistics - 5.14 -
Utilities 3.50 81.15 -
6.71 85.87
Unquoted fixed income securities 12.63
Cash and other assets 83.59 6.22 4.08
Total 10.05
10.37 100.00 100.00
6.04

100.00

Client Services : 03-2778 1000 3

Eastspring Investments Dynamic Fund

KEY PERFORMANCE DATA (CONTINUED)

Category 2019 2018 2017

Net Asset Value (NAV) (RM'000) 51,465 56,627 74,529
Units In Circulation (Units '000) 59,331 62,426 70,468
Net Asset Value Per Unit (RM) 0.8674 0.9071 1.0576
Highest Net Asset Value Per Unit (RM) 0.8925 0.9817 1.0577
Lowest Net Asset Value Per Unit (RM) 0.8490 0.8875 0.9735
Total Return (%)
- Capital Growth (1.92) (0.34) 5.64
- Income Distribution - - -
Total Return (%)
Gross Distribution Per Unit (RM) (1.92) (0.34) 5.64
Net Distribution Per Unit (RM) - - -
Management Expense Ratio (MER) (%)* - - -
Portfolio Turnover Ratio (PTR) (times)^
0.70 0.70 0.73
0.28 0.33 0.24

* 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.

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KEY PERFORMANCE DATA (CONTINUED)

1 year 3 years 5 years

1.1.2019 to 1.1.2017 to 1.1.2015 to

31.12.2019 31.12.2019 31.12.2019

(%) (%) (%)

Average total return (0.00) 1.79 5.97

Year ended 1.7.2018 to 1.7.2017 to 1.7.2016 to 1.7.2015 to 1.7.2014 to
30.6.2019 30.6.2018 30.6.2017 30.6.2016 30.6.2015

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

Annual total return 1.61 (4.68) 14.95 1.00 17.71

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 -1
NAV0

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.

Client Services : 03-2778 1000 5

Eastspring Investments Dynamic Fund

MANAGER’S REPORT

Fund Performance Over the 5-year period, the Fund recorded a return of 33.63%,
outperforming the benchmark return of 5.51% by 28.12%.

During the period under review, the Fund registered a return of
-1.92%, underperforming the benchmark return of -1.47% by
0.45%.

The Fund underperformance was mainly due to stock and sector
selections. Exposure to industrials, energy and material sectors
dragged the performance. Meanwhile, the contributors were
technology, healthcare and consumer discretionary sectors which
cushion the Fund performance. The Fund performance was also
supported by strong positive return from investments in corporate
bonds.

Eastspring Investments Dynamic Fund

70% - 5 Years Return Vs Benchmark 70%

60% 60%

5 years % Change 50% 50%

40% 40%

30% 30%

20% 20%

10% 10%

0% 0%

-10% May Aug Dec Apr Aug Dec Apr Aug Dec Apr Aug Dec Apr Aug -10%
Dec 2015 2015 2015 2016 2016 2016 2017 2017 2017 2018 2018 2018 2019 2019 Dec
2014 2019

Eastspring Investments Dynamic Fund Benchmark

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MANAGER’S REPORT (CONTINUED)

Fund Performance Benchmark:
(continued) (a) If 100% of the Fund’s NAV invested in equities and equity-

related securities:
FTSE Bursa Malaysia 100 Index (“FBM100”).
(b) If 100% of the Fund’s NAV invested in debentures and liquid
assets:
Maybank 12-month fixed deposit rate
(c) If invested in a mix of equities and equity-related securities,
debentures and liquid assets:
50% FBM100 + 50% Maybank 12-month fixed deposit rate.

Source: Lipper for Investment Management,
www.bursamalaysia.com and www.maybank2u.com.my as at
31 December 2019.

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

Analysis of Fund For the financial period ended 31 December 2019:
Performance

Income Capital Total Total Return of
Return Return* Return Benchmark

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

0.00 (1.92) (1.92) (1.47)

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

Distribution/ No distribution or unit split were declared for the financial period
Unit Split ended 31 December 2019.

Investment Equity Strategy
Strategy During The Fund will focus on stocks which has good capital appreciation
the Period Under potential with strong fundamental.
Review
Bond Strategy
The Fund participated in selected quality issuances for yield pick-
up, and traded on market volatility, subject to liquidity constraints.

Client Services : 03-2778 1000 7

Eastspring Investments Dynamic Fund

MANAGER’S REPORT (CONTINUED)

Asset Allocation Asset Allocation 31-Dec 30-Jun
2019 2019 Changes

(%) (%) (%)

Quoted securities 83.59 76.75 6.84
Unquoted fixed income
10.37 9.60 0.77
securities 6.04 13.65 (7.61)
Cash and other assets

Asset Allocation as at 31 December 2019

Cash and other assets Quoted securities
6.04% 83.59%

Unquoted fixed income
securities
10.37%

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

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

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MARKET REVIEW

Equity

The first two months of 3Q2019 saw regional markets correct largely due to an
escalation in the trade war and fear of increasing recession risks sparked by the further
collapse in global bond yields. President Trump announced an additional 10% tariff
on a further USD300bn in Chinese imports starting 1 September 2019, followed by
the US designating China as a “currency manipulator”. By the end of 3Q2019, global
and regional equity markets reversed some of the losses amid renewed optimism as
US and China return to the negotiation tables again. However, markets lost some
momentum later in the month following a drone attack on Saudi’s oil facilities and an
impeachment inquiry launched against the US President Trump. The Malaysian equity
market remained weak in light of the external headwinds faced. Domestically, the
Malaysian ringgit depreciated by about 1.34% for the 3Q2019, given its correlation
with the China’s CNY which depreciated 4.1% against the USD. Brent crude oil
prices declined by 8.67% for the 3Q2019 on concerns of slowing global growth and
demand. The June 2019 results season reported was uninspiring yet again with more
downgrades in earnings by consensus. Investor sentiment domestically weakened
following the end to Axiata and Telenor Asia merger talks due to “complexities”,
which led to profit taking activities. FTSE Russell’s decision to defer Malaysia’s
exclusion from the World Global Bond Index (“WGBI”) and keeping it on the watchlist,
was a relief but could be a case of kicking the can down the road, with the next
review in March 2020.

Global equity markets ended the year with solid gains in general, as the US agreed
to a Phase 1 trade deal with China, and cancelled tariffs on US$160bn of Chinese
goods due to take effect on 15 December 2019. While details of the deal were
hard to come by, the agreement in principle lifted a cloud that had been hanging
the global economy all year. In addition, the decisive win by the ruling Conservative
Party in the UK elections, almost guarantees the UK will leave the EU on 31 January,
albeit with a 23-month transitory period, providing clarity on Brexit. Domestically,
Malaysian equities continued to be one of the worst performers in the region. During
the 4Q2019, the Budget 2020 announced measures aimed at promoting jobs, FDIs
and structural reforms, rather than the traditional mega infrastructure pump-priming,
and offered tax incentives that should benefit the electronic and manufacturing
sectors. Malaysian equities were also subject to foreign outflows due to various
index rebalancing activities. In November 2019, the MSCI Emerging Market Index
saw an estimated net outflow of USD300-400m. Results reporting for 3Q2019 was
uninspiring, which will likely see the KLCI earnings for 2019 report another year of
negative growth (2018: -2.8%).

Client Services : 03-2778 1000 9

Eastspring Investments Dynamic Fund

MARKET REVIEW (CONTINUED)

The FBM KLCI closed the period under review at 1,588.76 points, down 4.99%. In
tandem with the FBM KLCI, the FBM Emas (“FBMEmas”) Index closed the period under
review lower 3.89% while the MSCI Asia Pacific ex-Japan Index rose by 4.71% in USD
terms.1

Bond

As economic threat loomed in the face of global weakness and heightened geopolitical
risks, the Fed delivered a total of 3 cuts of 25bps each in 3 consecutive meetings –
July, September and October - citing modest mid-cycle adjustments to its monetary
policy which brought the Fed Fund Rate to 1.50%-1.75%. In the December meeting,
policymakers unanimously voted to keep the policy rate unchanged as economic data
have been resilient and previous rate cuts have yet to fully filter through the economy,
which accorded the Fed some policy space in the event of economic weakness.
Similarly, the easing of monetary policies by global central banks to either combat an
already slowing growth or to protect against downside risk to growth, have resulted in
lower bond yields globally.

The trade tensions between the US and China have dominated news headlines during
the period under review with rounds of de-escalation and re-escalation, sending global
financial markets into cycles of risk-on and risk-off modes. However, market sentiment
improved towards the end of 2019 with progress on the US-China Phase one deal. In
UK, Prime Minister Johnson won the UK election by a wide margin, giving him more
control over the parliament and subsequently his plan for the UK to leave EU by 31
January 2020. Both the positive US-China deal and better clarity on Brexit reduced
two of the geopolitical risks that had plagued markets for years, have turned market
sentiment positive. While we see a broadly improving geopolitical backdrop, investors
will continue to follow the US-China talks closely as a complete resolution of trade war
is still far in sight, given the deep differences in US and China’s demands.

BNM maintained the Overnight Policy Rate (“OPR”) at 3.00% during the period under
review, largely consistent with the market’s expectation for BNM to keep its powder
dry on the back of improving visibility from the Budget. For 2020, the pro-growth
fiscal measures announced by the government in the Budget are expected to reduce
the pressure on monetary policy to push growth. BNM’s monetary policy direction
for 2020 is broadly expected to be data-dependent and event-driven given the
uncertainties surrounding geopolitical developments and the drag that they have on
global growth.

1 Source: Bloomberg: World indices

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MARKET REVIEW (CONTINUED)

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 September 2019, citing expectation
for continued discussion with BNM as well as the index users. The next index review
is slated to be in March 2020, where market volatility is expected to resurface prior to
the announcement as investors weigh in the different outcome probabilities.

On the economic front, Malaysia’s Gross Domestic Product (“GDP”) growth for the
third quarter of 2019 moderated to 4.4% (2Q2019: 4.9%), mainly due to lower
growth in the nation’s key sectors and a decline in the mining and construction
activities. On a quarter-on-quarter seasonally-adjusted basis, the economy grew by
0.9% (2Q2019: 1.0%). Private sector activity continued to drive growth – private
consumption increased +7.0% (2Q2019: 7.8%), which was supported by firm
household spending backed by continued income growth and moderately low
inflation. For the year 2019, official BNM GDP growth forecast remained at 4.3 –
4.8%. Headline inflation in November 2019 was recorded lower at +0.9% year-on-
year (“y-o-y“) compare to October (+1.1% y-o-y). Inflation rate for 2019 is expected
to be anchored around the current levels with the delay in the targeted fuel subsidy
implementation and the lapse of tax holiday impact. For the full year, BNM maintains
its inflation forecast at 0.70% - 1.70% while the government expects 2019 inflation
to be subdued at 1.00%.

For the period under review, the 3-years, 5-years, 10-years and 15-years Malaysian
Government Securities (“MGS”) yields decreased by 31bps, 27bps, 33bps and 31bps
to close at 2.98%, 3.15%, 3.30%, and 3.60%, respectively.2 Similarly, the 3-years,
5-years, 10-years and 15-years Government Investment Issue (“GII”) yields decreased
by 28bps, 23bps, 23bps and 19bps to close at 3.06%, 3.19%, 3.42%, and 3.72%.
Both MGS & GII yield curve shifted lower during the period mirroring the move in the
global bond market on the back of (1) escalation of trade tension between US and
China, (2) consecutive global growth outlook downgrades amidst materialisation of
downside risk, and (3) series of policy rate cuts by global central banks with market’s
expectation of more cuts. Meanwhile, corporate bond yields generally moved in
tandem with sovereign bond yields, albeit at a lag. Activities in the corporate bond
market continued to be vibrant, supported by ample liquidity and a stable credit
environment.

2 Source: Source: Bloomberg

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Eastspring Investments Dynamic Fund

MARKET REVIEW (CONTINUED)

On the supply front, Corporate bond issuances continued to remain healthy in the
period at around RM41billion. Major primary issuances during the period were mainly
government guaranteed bonds and corporates bonds.

REBATES AND SOFT COMMISSIONS

During the period under review, the Manager and its delegates (if any) received goods
and services which directly assist the investment management of the Fund, including
research and advisory services, market analyses, data and quotation services, and computer
hardware and software used for and/or in support of the investment process of fund
managers.
The Manager and its delegates (if any) have not received any rebates or shared any
commissions from any brokers during the same period under review.

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EASTSPRING INVESTMENTS
DYNAMIC FUND

UNAUDITED FINANCIAL STATEMENTS

FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 31 DECEMBER 2019

Client Services : 03-2778 1000 13

Eastspring Investments Dynamic Fund

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 16 to 61 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 31 December 2019 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 KIN
Executive Director/Chief Executive Officer

ISKANDER BIN ISMAIL MOHAMED ALI
Independent, Non-Executive Director

Kuala Lumpur
Date: 17 February 2020

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

We have acted as Trustee for Eastspring Investments Dynamic Fund (the “Fund”) for the
financial period ended 31 December 2019. 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 Lumpur
Date: 17 February 2020

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Eastspring Investments Dynamic Fund

UNAUDITED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 31 DECEMBER 2019

Note 6-months 6-months
financial financial
period ended period ended
31.12.2019 31.12.2018

RM RM

INVESTMENT (LOSS)/INCOME 6 707,674 874,144
Gross dividend income
Interest income from deposits with licensed 86,755 182,428

financial institutions 121,921 169,358
Interest income from unquoted fixed
(1,515,959) (113,424)
income securities (599,609) 1,112,506
Net loss on financial assets

at fair value through profit or loss

EXPENSES 3 (329,067) (427,679)
Management fee
Trustee fee 4 (18,428) (23,950)
Audit fee
Tax agent fee (3,671) (3,680)
Other expenses
Transaction costs (1,709) (1,715)

(16,493) (14,882)

(86,484) (117,310)

(455,852) (589,216)

(LOSS)/PROFIT BEFORE TAXATION (1,055,461) 523,290

TAXATION 5 - (2,908)

(LOSS)/PROFIT AFTER TAXATION AND (1,055,461) 520,382
TOTAL COMPREHENSIVE (LOSS)/INCOME

(Loss)/profit after taxation is made up 1,124,853 7,365,677
of the following: (2,180,314) (6,845,295)
Realised amount (1,055,461)
Unrealised amount 520,382

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

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UNAUDITED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2019

Note 2019 2018
RM RM

ASSETS 7 3,263,047 2,990,008
Cash and cash equivalents
Amount due from Manager 12,057 90,264
Amount due from broker
Dividends receivable - 527,791
Financial assets at fair value through
2,236 78,890
profit or loss
TOTAL ASSETS 6 48,339,662 53,105,625
51,617,002 56,792,578

LIABILITIES 73,700 75,839
Amount due to Manager 54,455 60,835
Accrued management fee
Amount due to Trustee 3,050 3,407
Other payables and accruals 20,834 22,892
Tax payable
TOTAL LIABILITIES - 2,110
152,039 165,083

NET ASSET VALUE OF THE FUND 51,464,963 56,627,495

EQUITY 22,024,128 24,792,752
Unit holders’ capital 29,440,835 31,834,743
Retained earnings

NET ASSET ATTRIBUTABLE TO UNIT HOLDERS 51,464,963 56,627,495

NUMBER OF UNITS IN CIRCULATION 8 59,330,776 62,425,826

NET ASSET VALUE PER UNIT (RM) 0.8674 0.9071

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

Client Services : 03-2778 1000 17

Eastspring Investments Dynamic Fund

UNAUDITED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 31 DECEMBER 2019

Unit Retained Total
holders’ earnings RM

capital RM

RM

Balance as at 1 July 2019 24,587,877 30,496,296 55,084,173

Movement in unit holders’ 1,244,077 - 1,244,077
contribution: (3,807,826) - (3,807,826)

Creation of units from applications - (1,055,461) (1,055,461)
Cancellation of units 22,024,128 29,440,835 51,464,963
Total comprehensive loss

for the financial period
Balance as at 31 December 2019

Balance as at 1 July 2018 39,910,819 31,314,361 71,225,180

Movement in unit holders’ 3,302,837 - 3,302,837
contribution: (18,420,904) - (18,420,904)

Creation of units from applications - 520,382 520,382
Cancellation of units
Total comprehensive income 24,792,752 31,834,743 56,627,495

for the financial period
Balance as at 31 December 2018

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

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UNAUDITED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 31 DECEMBER 2019

Note 6-months 6-months
financial financial
period ended period ended
31.12.2019 31.12.2018

RM RM

CASH FLOWS FROM OPERATING 13,481,572 27,375,559
ACTIVITIES (16,059,440) (20,598,163)

Proceeds from sale of investments 793,802 1,059,434
Purchase of investments
Dividends received 86,755 182,428
Interest received from deposits with licensed
122,010 182,293
financial institutions (330,824) (440,089)
Interest received from unquoted fixed (18,526)
(112,115) (24,645)
income securities (140,382)
Management fee paid (2,036,766)
Trustee fee paid 7,596,435
Payment for other fees and expenses

Net cash (used in)/generated from
operating activities

CASH FLOWS FROM FINANCING 1,245,476 3,496,997
ACTIVITIES (3,842,564) (18,424,286)

Cash proceeds from units created - (64,580)
Payments for cancellation of units (2,597,088) (14,991,869)
Distribution paid
Net cash used in financing activities

NET DECREASE IN CASH AND (4,633,854) (7,395,434)
CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS AT THE 7,896,901 10,385,442
BEGINNING OF THE FINANCIAL PERIOD

CASH AND CASH EQUIVALENTS AT THE 7 3,263,047 2,990,008
END OF THE FINANCIAL PERIOD

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

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Eastspring Investments Dynamic Fund

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 31 DECEMBER 2019

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,

as modified by financial assets and financial liabilities at fair value through profit or
loss, except as disclosed in this summary of significant accounting policies, and in
accordance with Malaysian Financial Reporting Standards (“MFRS”) and International
Financial Reporting Standards (“IFRS”).

The preparation of financial statements in conformity with the MFRS and IFRS
require 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 judgement or complexity, or areas where
assumptions and estimates are significant to the financial statements are disclosed in
Note J.

a. Standards, amendments to published standards and interpretations that are
effective:

The Fund has applied the following amendments for the first time for the
financial year beginning on 1 July 2019:

• Amendments to MFRS 112 ‘Income Taxes’ (effective from 1 January 2019)
clarify that where income tax consequences of dividends on financial
instruments classified as equity is recognised (either in profit or loss, other
comprehensive income or equity) depends on where the past transactions
that generated distributable profits were recognised.

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Accordingly, the tax consequences are recognised in profit or loss when an
entity determines payments on such instruments are distribution of profits
(that is, dividends). Tax on dividend should not be recognised in equity merely
on the basis that it is related to a distribution to owners.

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 is recognised on the accrual basis using the

effective interest method.
Interest income from unquoted fixed income securities including amortisation of

premium and accretion of discount are recognised using the effective interest method.
Dividend income is recognised on the ex-dividend date, when the right to receive the

dividend has been established.
Realised gain or loss on disposal of quoted securities are accounted for as the

difference between the net disposal proceeds and the carrying amount of investments,
determined on a weighted average cost basis.
Realised 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, determined on a cost adjusted basis for accretion of discount or
amortisation of premium.

C. TAXATION
Current tax expense is determined according to the Malaysian tax laws at the current

rate based upon the taxable income earned during the financial period.

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Eastspring Investments Dynamic Fund

D. PRESENTATION AND FUNCTIONAL 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 presentation and functional currency.

E. FINANCIAL ASSETS AND FINANCIAL LIABILITIES
i. Classification

The Fund classify 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 Fund has not taken the option to irrevocably designate any
equity securities as fair value through other comprehensive income. Consequently,
all investments are measured at fair value through profit or loss.

The Fund classifies cash and cash equivalents, dividends receivable and amount
due from Manager as financial assets at amortised cost as these financial assets
are held to collect contractual cash flows consisting of the amount outstanding.

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

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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 liability is derecognised when the obligation under the liability is
extinguished. Gains and losses are recognised in the statement of comprehensive
income when the liabilities are derecognised, and through the amortisation
process.

Unrealised 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.

Dividend income from financial assets at fair value through profit or loss is
recognised in the statement of comprehensive income as part of gross dividend
income when the Fund’s right to receive payments is established.

Quoted securities in Malaysia are valued at the last done market price quoted
on the Bursa Malaysia Securities Berhad (“Bursa Securities”) at the date of the
statement of financial position.

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’s (“SC”) Guidelines on Unit Trust
Funds. Refer to Note J to the financial statements for further explanation.

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Eastspring Investments Dynamic Fund

If a valuation based on the market price does not represent the fair value of the
securities, for example during abnormal market conditions or when no market
price is available, including in the event of a suspension in the quotation of
the securities for a period exceeding 14 days, or such shorter period as agreed
by the Trustee, then the securities are valued as determined in good faith by
the Manager, based on the methods or basis approved by the Trustee after
appropriate technical consultation.

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

Loans and receivables and other financial liabilities are subsequently carried at
amortised cost using the effective interest rate method.

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.

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Write-off

The Fund writes off financial assets, in whole or in part, when it has exhausted all
practical recovery efforts and has concluded there is no reasonable expectation
of recovery. The assessment of no reasonable expectation of recovery is based on
unavailability of 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.

As a practical expedient, the Fund may measure impairment on the basis of an
instrument’s fair value using an observable market price.

F. CASH AND CASH EQUIVALENTS

For the purpose of the statement of cash flows, cash and cash equivalents comprise bank
balance and deposit with a licensed financial institution 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 year if unit holder exercises the right to put the unit back to the Fund.

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Eastspring Investments Dynamic 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.

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. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments comprise financial assets and financial liabilities. 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 information presented herein represents the estimates of fair values
as at the date of the statement of financial position.

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J. 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 Securities Commission Guidelines on Unit Trust
Funds.

However, the Manager is of the opinion that in applying the accounting policies,
no significant judgment was required.

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.

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Eastspring Investments Dynamic Fund

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS

FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 31 DECEMBER 2019

1. INFORMATION ON THE FUND

Eastspring Investments Dynamic Fund (the “Fund”) was constituted pursuant to the
execution of a Deed dated 5 November 2003, Master Supplemental Deed dated 12
July 2007 and Second Supplemental Master Deed dated 30 November 2009 between
HSBC (Malaysia) Trustee Berhad (“HSBC Trustee”) and Eastspring Investments Berhad
(the “Manager”). The Fund replaced HSBC Trustee with Deutsche Trustees Malaysia
Berhad (the “Trustee”) effective 1 October 2010. A Supplemental Master Deed was
entered into between Eastspring Investments Berhad (the “Manager”) and Deutsche
Trustees Malaysia Berhad (the “Trustee”) on 30 July 2010 to effect the change of trustee
from HSBC 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 6 November 2003 and will continue its operations until
terminated by the Trustee or the Manager as provided under Part 12 of the Deed.

The main objective of the Fund is to seek to provide investors with capital appreciation
by actively investing in equity and equity-related securities. For defensive considerations,
the Fund may invest in debentures and money market instruments.

The Fund seeks to achieve its objective by adopting a flexible asset allocation strategy
between the different asset classes of equities and equity-related securities, debentures
and liquid assets, depending on the investment market outlook. All investments will
be subjected to the Securities Commission’s (“SC”) Guidelines on Unit Trust Funds, the
Deed and the objective of the Fund.

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 fund management.

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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), stock/issuer risk, liquidity risk, non-compliance risk, fund
management risk, capital risk and credit/default 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 Financial Total
assets at assets at fair RM
amortised value through
profit or loss 3,263,047
cost 12,057
RM 2,236
RM
43,006,175
2019 7 3,263,047 -
12,057 - 5,333,487
Cash and cash equivalents 6 2,236 - 51,617,002
Amount due from Manager 6 - 43,006,175
Dividends receivable
Quoted securities - 5,333,487
Unquoted fixed income 3,277,340 48,339,662

securities

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Eastspring Investments Dynamic Fund

Note Loans and Financial Total
receivables assets at fair
value through 2,990,008
profit or loss 90,264

2018 7 2,990,008 - 527,791
90,264 - 78,890
Cash and cash equivalents 6 -
Amount due from Manager 6 527,791 - 45,951,523
Amount due from broker 78,890 45,951,523
Dividends receivable - 7,154,102
Quoted securities 7,154,102 56,792,578
Unquoted fixed income - 53,105,625
3,686,953
securities

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

Market risk

i. Price risk

This risk refers to changes and developments in regulations, politics and the
economy of the country. The very nature of a Unit Trust Fund, however, helps
mitigate this risk because a Fund would generally hold a well-diversified portfolio
of securities from different market sectors that the collapse of any one security or
any one market sector would not impact too greatly on the value of the Fund.

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The table below shows assets of the Fund as at 31 December which are exposed
to price risk:

2019 2018
RM RM

Quoted securities designated at fair value 43,006,175 45,951,523
through profit or loss
5,333,487 7,154,102
*Unquoted fixed income securities
designated at fair value through
profit or loss

* Includes interest receivable of RM60,487 (2018: RM97,922).

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

% Change in price Market Increase/(decrease)
value in (loss)/profit
2019
+5% RM after tax and net
-5% asset value

2018 RM
+5%
-5% 50,693,134 2,413,959
45,865,216 (2,413,959)

55,658,088 2,650,385
50,357,318 (2,650,385)

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Eastspring Investments Dynamic Fund

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.

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.

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The table below summarises the sensitivity of the Fund’s (loss)/profit after tax and
NAV to movements in prices of unquoted fixed income securities held by the Fund
as a result of movement in interest rate. The analysis is based on the assumptions
that the interest rate changed by 1% (2018: 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.

2019 2018

% Change in interest rate of Impact on loss Impact on profit
unquoted fixed income securities after tax/net after tax/net
asset value asset value
+1% (2018: +1%)
-1% (2018: -1%) RM RM

(14,939) (6,854)
15,014 6,876

The Fund’s investments in deposits with licensed financial institutions are short
term in nature. Therefore, exposure to interest rate fluctuations is minimal.

Stock/Issuer risk

This risk refers to the individual risk of the respective companies issuing the securities.
Specific risk includes but is not limited to changes in consumer tastes and demand,
legal suits, competitive operating environments, changing industry conditions and
management omissions and errors. However, this risk is minimised through investing
in a wide range of companies in different sectors and thus function independently
from one another.

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Eastspring Investments Dynamic Fund

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 Fund 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 liquid assets, after consultation with the Trustee,
to meet anticipated payments and cancellations of units by unit holders. Liquid assets
comprise cash, deposit with a licensed financial institution 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 than Between Total
1 month 1 month RM
to 1 year
RM 73,700
RM 54,455

2019 73,700 - 3,050
54,455 - 20,834
Amount due to Manager - 152,039
Accrued management fee 3,050 20,834
Amount due to Trustee - 20,834
Other payables and accruals
Contractual cash outflows 131,205

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Less than Between Total
1 month 1 month RM
to 1 year
RM 75,839
RM 60,835

2018 75,839 - 3,407
60,835 - 22,892
Amount due to Manager - 162,973
Accrued management fee 3,407 22,892
Amount due to Trustee - 22,892
Other payables and accruals
Contractual cash outflows 140,081



Non-compliance risk

Non-compliance risk arises when the Manager and others associated with the Fund
are not compliant to the rules set out in the Fund’s constitution or the law that
governs the Fund or applicable internal control procedures, or act fraudulently or
dishonestly.

The 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.


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 has an oversight function over management of the Fund by the

management company to safeguard the interests of unit holders.

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Eastspring Investments Dynamic Fund

Capital risk
The capital of the Fund is represented by equity consisting of unit holders’ capital

of RM22,024,128 (2018: RM24,792,752) and retained earnings of RM29,440,835
(2018: RM31,834,743). 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.
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 review 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 in licensed financial institutions
is managed by ensuring that the Fund will only place deposits in 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 credit/default risk is minimal as all transactions in quoted securities are settled/paid
upon delivery using approved brokers.
The Fund seeks to mitigate credit/default risk by investing in high quality fixed income
securities.


36 Client Services : 03-2778 1000

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

Financial assets at Cash Dividends Amount Total
fair value through and cash receivable due from RM
equivalents Manager
profit or loss RM
RM RM
RM

2019 - 42,778 - - 42,778
Finance - 3,220,269 - - 3,220,269
- AA1
- AA2 -- 2,236 - 2,236
Technology
- NR 1,092,896 - - - 1,092,896
Unquoted fixed 1,043,764 - - - 1,043,764
1,026,911 - - - 1,026,911
income securities 2,169,916 - - - 2,169,916
- AA- IS
- A1 - - - 12,057 12,057
- AAA 5,333,487 3,263,047 2,236 12,057 8,610,827
- NR
Other
- NR
Interim Report
Client Services : 03-2778 1000 37

Eastspring Investments Dynamic FundFinancialCashDividendsAmountAmountTotal
38 Client Services : 03-2778 1000assets at fairand cashreceivable due from due from RM
value through equivalents Manager
profit or loss RM broker
RM RM
RM RM

2018

Finance

- AA1 - 49,734 - - - 49,734
- - - 2,940,274
- AAA - 2,940,274

Consumer Products

& Services

- NR - - 1,920 - - 1,920
48,345 - - 48,345
Financial Services 12,980 - - 12,980
15,645 - - 15,645
- NR - -

Plantation

NR - -

Technology

- NR - -

Unquoted fixed

income securities

- AA- IS 1,043,756 - - - - 1,043,756
- - - 1,020,444
- A1 1,020,444 - - - - 1,021,131
- - - 4,068,771
- AAA 1,021,131 -
- 90,264 527,791 618,055
- AA3 4,068,771 - 78,890 90,264 527,791 10,841,055

Other

- NR - -

7,154,102 2,990,008

None of these assets are past due or impaired.

Interim Report

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 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.


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.

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Eastspring Investments Dynamic Fund

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 judgment
by the Fund. The Fund considers observable data to be that market data that
is readily available, regularly distributed or updated, reliable and verifiable, not
proprietary, and provided by independent sources that are actively involved in the
relevant market.

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

Level 1 Level 2 Level 3 Total
RM RM RM RM

2019 43,006,175 - - 43,006,175
- 5,333,487
Financial assets at fair - 5,333,487
value through
profit or loss:
Quoted securities
Unquoted fixed
income securities

2018 45,951,523 - - 45,951,523
- 7,154,102
Financial assets - 7,154,102
at fair value through
profit or loss:
Quoted securities
Unquoted fixed
income securities


Investments whose values are based on quoted market prices in active markets,

and are therefore classified within Level 1, include active quoted securities.
The Fund does not adjust the quoted prices for these instruments. The Fund’s
policies on valuation of these financial assets are stated in Note E to the financial
statements.

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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 these
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,
dividends receivable and all liabilities are a reasonable approximation of their fair
values due to their short term nature.

3. MANAGEMENT FEE
In accordance with the Deed, the Manager is entitled to a management fee at a rate

not exceeding 3.00% per annum of the net asset value of the Fund accrued and
calculated on daily basis.

For the financial period ended 31 December 2019, the management fee is recognised
at a rate of 1.25% (2018: 1.25%) per annum of 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 of the net asset value of the Fund, subject to a minimum
fee of RM18,000 per annum.

For the financial period ended 31 December 2019, the Trustee’s fee is recognised at a
rate of 0.07% (2018: 0.07%) per annum of the net asset value of the Fund, subject to
a minimum fee of RM18,000 per annum.

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

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Eastspring Investments Dynamic Fund

5. TAXATION 6-months 6-months
financial financial
Tax charged for the financial period:
Current taxation-local period period
ended ended
31.12.2019 31.12.2018

RM RM

- 2,908

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

(Loss)/profit before taxation 6-months 6-months
financial financial
Tax at Malaysian statutory rate of 24% (2018: 24%)
period period
Tax effects of: ended ended
(Investment income exempt from tax)/ 31.12.2019 31.12.2018

investment loss not deductible for tax purposes RM RM
Expenses not deductible for tax purposes (1,055,461) 523,290
Restriction on tax deductible expenses for
(253,311) 125,590
Unit Trust Funds
Income subject to different tax rate 143,907 (260,022)

Taxation 29,547 37,886

79,857 103,526
- (4,072)

- 2,908

42 Client Services : 03-2778 1000

Interim Report

6. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

Designated at fair value through profit or loss: 2019 2018
Quoted securities (Note 6 (i)) RM RM
Unquoted fixed income securities (Note 6 (ii))
43,006,175 45,951,523
5,333,487 7,154,102

48,339,662 53,105,625

Net loss on financial assets at fair value 664,355 6,731,871
through profit or loss: (2,180,314) (6,845,295)
Realised gain on disposals (1,515,959)
Change in unrealised fair value loss (113,424)

Client Services : 03-2778 1000 43

Eastspring Investments Dynamic Fund

i. Quoted securities

Name of counter Quantity Aggregate Fair value Percentage
Units cost as at of net
Construction
Econpile Holdings Berhad RM 31.12.2019 asset value
IJM Corporation Berhad of the Fund
RM
%

184,000 151,432 138,920 0.27
248,000 554,454 538,160 1.05
432,000 705,886 677,080 1.32

Consumer Products & 75,000 152,655 157,500 0.31
Services 104,000 263,203 247,520 0.48
353,000 2,750,804 2,135,650 4.15
Bermaz Auto Berhad 641,000 2,722,787 2,108,890 4.10
DRB-HICOM Berhad 351,704 270,864 0.53
Genting Berhad 83,600 1,314,298 1,155,000 2.24
Genting Malaysia Berhad 50,000 481,840 523,752 1.02
Padini Holdings Berhad 27,800 1,046,243 996,780 1.94
Petronas Dagangan Berhad 449,000 9,083,534 7,595,956 14.77
PPB Group Berhad 1,783,400
Sime Darby Berhad

Energy 377,000 1,301,612 1,300,650 2.53
Dialog Group Berhad 402,000 156,780 152,760 0.30
Velesto Energy Berhad 779,000 2.83
1,458,392 1,453,410

44 Client Services : 03-2778 1000

Interim Report

i. Quoted securities (continued)

Name of counter Quantity Aggregate Fair value Percentage
Units cost as at of net
Financial Services
Alliance Bank Malaysia RM 31.12.2019 asset value
of the Fund
Berhad RM
AMMB Holdings Berhad %
Bursa Malaysia Berhad
CIMB Group Holdings 56,000 157,013 147,280 0.29
77,000 336,846 301,070 0.58
Berhad 190,700 1,451,953 1,161,363 2.26
Hong Leong Bank Berhad
Hong Leong Financial 575,930 3,680,202 2,966,040 5.76
0.94
Group Berhad 28,000 527,629 484,400
Malayan Banking Berhad 1.06
Public Bank Berhad 32,400 585,011 547,560 7.07
RHB Bank Berhad 421,000 4,251,841 3,637,440 5.14
136,000 3,320,673 2,643,840 0.69
Health Care 23.79
Hartalega Holdings 61,000 335,991 352,580
1,578,030 14,647,159 12,241,573
Berhad
IHH Healthcare Berhad 200,000 1,291,070 1,096,000 2.13
Kossan Rubber Industries 262,000 1,424,352 1,433,140 2.78

Berhad 247,000 859,091 1,027,520 2.00
Top Glove Corporation
220,000 1,218,903 1,034,000 2.01
Berhad 929,000 4,793,416 4,590,660 8.92

Client Services : 03-2778 1000 45

Eastspring Investments Dynamic Fund

i. Quoted securities (continued)

Name of counter Quantity Aggregate Fair value Percentage
Units cost as at of net
Industrial Products &
Services RM 31.12.2019 asset value
of the Fund
Cahya Mata Sarawak RM
Berhad %

HSS Engineers Berhad 65,000 157,424 147,550 0.29
Petronas Chemicals 189,000 163,050 159,705 0.31

Group Berhad 128,000 1,185,139 940,800 1.83
Sunway Berhad 61,000 108,922 109,800 0.21
V.S. Industry Berhad 264,874 273,360 0.53
204,000 1,631,215 3.17
Plantation 647,000 1,879,409
Genting Plantations 0.71
34,400 360,206 363,952 1.07
Berhad 119,000 524,933 548,590
IOI Corporation Berhad 1.02
Kuala Lumpur Kepong 21,100 492,660 523,280
1.54
Berhad 145,000 719,830 790,250 4.34
Sime Darby Plantation
319,500 2,097,629 2,226,072 0.55
Berhad
230,000 293,378 285,200 0.81
Property
IOI Properties Group 573,000 485,164 418,290 0.54
1.90
Berhad 303,000 260,368 277,245
Malaysian Resources 1,106,000 1,038,910 980,735

Corporation Berhad
Sime Darby Property

Berhad

46 Client Services : 03-2778 1000