RHB ASIAN HIGH YIELD FUND - USD ANNUAL REPORT 2021

RHB ASIAN HIGH YIELD FUND – USD

SECOND QUARTER REPORT

For the financial period ended 30 November 2021

1

GENERAL INFORMATION ABOUT THE FUND

Name, Category and Type

Fund Name - RHB Asian High Yield Fund - USD

Fund Category - Feeder (Fixed Income) fund

Fund Type - Income and Growth fund

Investment Objective, Policy and Strategy

Objective of the Fund

The Fund aims to provide income^ and long term* capital growth by investing in

one target fund.

Note: ^ The income is in the form of units, unless the Unit Holder specifically requests for the

distribution to be paid out to the Unit Holder.

* “long term” in this context refers to a period of between 5 - 7 years.

Strategy

The Fund will invest principally in the USD denominated class A shares of the

Fidelity Funds – Asian High Yield Fund (“Target Fund”). The Target Fund is one of

the sub-funds under the umbrella fund, Fidelity Funds. Fidelity Funds is an open-

ended investment company established in Luxembourg as a Société

d’Investissement à Capital Variable (“SICAV”) and qualifies as an undertaking for

collective investment in transferable securities (“UCITS”) under Luxembourg laws.

Fidelity Funds is managed by the management company, FIL Investment

Management (Luxembourg) S.A. and its regulatory authority is the Commission de

Surveillance du Secteur Financier (Luxembourg Financial Sector Supervising

Authority) under Chapter 15 of the Luxembourg Law of 17 December 2010. The

investment manager of the Target Fund is FIL Fund Management Limited

(domiciled in Bermuda) and its regulatory authority is Bermuda Monetary

Authority. The sub-investment manager of the Target Fund is FIL Investment

Management (Hong Kong) Limited whose regulatory authority is the Securities and

Futures Commission of Hong Kong under the Securities and Futures Ordinance

(Cap.571 of the Laws of Hong Kong). Both the Target Fund and the USD

denominated class A shares of the Target Fund were launched on 2 April 2007.

2

The asset allocation of the Fund will be as follows:-

At least 95% of

Net Asset Value

- Investments in the USD denominated class A shares of the

Target Fund.

2% to 5% of

Net Asset Value

- Investment in liquid assets including money market

instruments and Placements of Cash.

Note: Placements of Cash are placements of cash in any deposits or investment

accounts with any financial institution(s) that are not embedded with or linked to

financial derivative instruments.

Performance Benchmark

Bank of America Merrill Lynch (“BoFA/Merrill Lynch Blended Index”): Asian

Dollar High Yield Index (“ACCY”), 20% Level 4 Cap 3% Constrained.

Permitted Investments

The Fund will invest in one collective investment scheme i.e. Fidelity Funds – Asian

High Yield Fund, trade in financial derivatives, invest in money market instruments

and make Placements of Cash with any financial institutions, and any other

investments as agreed between the Trustee and the Manager from time to time,

provided that there is no inconsistency with the Fund’s objective.

Distribution Policy

Subject to the level of income, distribution, if any, after deduction of taxation and

expenses (i.e. net distributions) is declared quarterly. Any distribution made, will be

out of the Fund’s realised gains or realised income.

3

Effective from 22 November 2021, the definition of Sophisticated Investor will

be as follows:

Sophisticated Investor 1. A unit trust scheme, private retirement scheme or

prescribed investment scheme; or

2. Bank Negara Malaysia; or

3. A licensed person or a registered person; or

4. An exchange holding company, a stock exchange, a

derivatives exchange, an approved clearing house, a

central depository or a recognized market operator;

or

5. A corporation that is licensed, registered or approved

to carry on any regulated activity or capital market

services by an authority in Labuan or outside

Malaysia which exercises functions corresponding to

the functions of the Securities Commission

Malaysia; or

6. A bank licensee or an insurance licensee as defined

under the Labuan Financial Services and Securities

Act 2010; or

7. An Islamic bank licensee or a takaful licensee as

defined under the Labuan Islamic Financial Services

and Securities Act 2010; or

8. A chief executive officer or a director of any person

referred to in paragraphs 3, 4, 5, 6 and 7; or

9. A closed-end fund approved by the Securities

Commission Malaysia; or

10. A company that is registered as a trust company

under the Trust Companies Act 1949 and has assets

under its management exceeding ten million ringgit

or its equivalent in foreign currencies; or

11. A corporation that—

(a) is a public company under the Companies Act

4

2016 which is approved by the Securities

Commission Malaysia to be a trustee under the

Capital Markets and Services Act 2007 and has

assets under its management, exceeding ten

million ringgit or its equivalent in foreign

currencies; or

(b) is carrying on the regulated activity of fund

management solely for the benefit of its related

corporations and has assets under its management

exceeding ten million ringgit or its equivalent in

foreign currencies; or

12. A corporation with total net assets exceeding ten

million ringgit or its equivalent in foreign currencies

based on the last audited accounts; or

13. A partnership with total net assets exceeding ten


currencies; or

14. A statutory body^ established under any laws unless

otherwise determined by the Securities Commission

Malaysia; or

^Pursuant to Technical Note No.1/2021 issued by the

Securities Commission Malaysia, a “joint management

body” established under section 17 of the Strata

Management Act 2013 is not qualified to be a

“statutory body” for the purposes of Paragraph 14,

Part I of Schedules 6 and 7 of the Capital Markets and

Services Act 2007, given that the function or mandate of

a “joint management body” does not include investing

in capital market products. Such entity should not

therefore be treated as a high-net worth entities.

15. A pension fund approved by the Director General of

Inland Revenue under the Income Tax Act 1967; or

16. An individual—

(a) whose total net personal assets, or total net joint

assets with his or her spouse, exceeding three


5

currencies, excluding the value of the

individual’s primary residence;

(b) who has a gross annual income exceeding three

hundred thousand ringgit or its equivalent in

foreign currencies in the preceding twelve

months;

(c) who, jointly with his or her spouse, has a gross

annual income exceeding four hundred thousand

ringgit or its equivalent in foreign currencies in

the preceding twelve months; or

(d) whose total net personal investment portfolio^ or

total net joint investment portfolio^ with his or

her spouse, in any capital market products

exceeding one million ringgit or its equivalent in

foreign currencies; or

^Pursuant to Technical Note No.1/2021 issued by the

Securities Commission Malaysia, total net investment

portfolio would be the total investments in any capital

market products less any borrowings under any margin

account for and/or any other borrowings taken for the

capital market products in which the individual has

invested.

17. Any person who acquires unlisted capital market

products where the consideration is not less than two

hundred and fifty thousand ringgit or its equivalent

in foreign currencies for each transaction whether

such amount is paid for in cash or otherwise.

6

MANAGER’S REPORT

MARKET REVIEW

During the review financial period (1 June 2021 to 30 November 2021) the Asian

High Yield reference index returned -7.55% in United States Dollar (“USD”)

terms.

Asian high yield market posted negative returns over the review period as credit

spreads widened significantly. The weak performance was driven by elevated

volatility in China’s property sector, against the backdrop of rising regulatory and

idiosyncratic risks. Notably, highly indebted China Evergrande Complex’s USD

bond prices fell amid a slew of negative headlines. The subsequent spill-over to

other single B rated names pulled the entire segment lower. However, credit

spreads tightened to some extent in August 2021 amid promising interim results

by several property developers even as volatility in China’s property sector

remained an overhang. Several rating downgrades for China Evergrande and an

unexpected default by Fantasia in October 2021 inflicted further damage to

market sentiment. The subsequent focus on upcoming bond maturities for weaker

developers and a wave of negative rating actions intensified the selloff in lower

rated property names. The selloff spilled over to higher quality names in

November 2021 amid lingering concerns of excessive leverage in the sector as

several developers proposed bond exchange programs citing liquidity stress.

Markets were worried after one of Kaisa Group’s businesses reportedly missed a

payment on its wealth management product amid unprecedented liquidity

pressures. A significant slowdown in China’s new home sales which fell 32.00%

on a Year-on-Year (“YoY”) basis in October 2021 - the traditionally peak season

for homebuying, dampened sentiments further. Markets managed to regain some

lost ground later, amid news flow around credit easing measures which indicated

a more conducive backdrop for liquidity constrained Chinese developers. These

included some early signs of incrementally positive property policies, e.g.

People's Bank of China (“PBOC”) guiding banks to provide healthy funding

access to developers, lower mortgage rate and faster mortgage release in selected

cities. However, markets fell again later, as investors focused on the potential

impact of the more virulent Omicron variant of COVID-19 on various sectors

including Macau gaming given China’s COVID-zero policy.

Data from China indicated a broad-based slowdown as a result of policy

tightening early in the year, COVID-19 induced lockdowns in several provinces,

cooling property sector, weak domestic demand and power rationing. In turn, the

country’s official manufacturing Purchasing Managers’ Index (“PMI”) continued

to fall for several months before rising to 50.1 in November 2021, as factory

activity was supported by easing power shortages. China registered third quarter

(“3Q”) Gross Domestic Product (“GDP”) growth of 4.90% following a growth of

7.90% in the second quarter (“2Q”) on a YoY basis in year 2021 amid a property

7

and infrastructure induced slowdown. After several months of weak data,

November’s economic data appeared to stabilize as China’s exports, retail sales

and industrial output rose more than expected, even as total social financing

growth remained unchanged at 10.00% from a year ago, the credit impulse

decelerated and fixed asset investments were weaker than expected.

On the policy front, the PBOC announced a 50 basis points (“bps”) cut in the

Reserve Requirement Ratio (“RRR”) effective mid-July 2021, injecting an

estimated Chinese Yuan Renminbi (“CNY”) 1trillion liquidity into the system.

This signals a shift in the government and PBOC’s intention to provide support to

the economy as and when needed, contrary to expectations of monetary policy

tightening earlier in the year 2021. The PBOC further reiterated its commitment

to maintain stable credit growth, support for targeted sectors and boosted liquidity

injections towards the period end to maintain stability in the markets.

Elsewhere in Asia, resurgence of COVID-19 cases in the Southeast Asian

countries was in focus as mobility restrictions were put in place around mid year

2021. Subsequently, the countries’ manufacturing PMI registered declines before

regaining momentum towards period end. Indonesia laid out plans to expand its

COVID-19 recovery budget this year from earlier targets and extended its tax

incentives for businesses to boost recovery while Bank of Indonesia left its

benchmark interest rate at record lows. Indonesia’s 3Q GDP grew slower than

expected at 3.50% from a year ago, as private consumption dragged due to

mobility restrictions earlier in the year. Over in India, July 2021 to September

2021 GDP grew 8.45% compared to previous year as the country recovered from

the aftermath of second wave of COVID-19 pandemic. Fitch retained its BBB-

issuer rating and negative outlook for India, citing uncertainty around the

country’s debt trajectory. Bank of Thailand cut its year 2021 GDP forecast further

to 0.70% after lowering it to 1.80% in June 2021 as the country faces its worst

outbreak of COVID-19. Thailand’s cabinet announced relief measures along with

a scheme to boost local travel and support economic growth.

Meanwhile, United States Treasury (“UST”) yield curve ended the period flatter.

The US Federal Reserve’s (“Fed”) statement in June 2021 was a bit more

hawkish than expected and median estimates pointed towards two rate hikes by

the end of year 2023, up from none in its March 2021 projection. Later in August

2021, the Fed indicated that its tapering timeline would be disconnected from the

timeline for interest rate increases to give it more flexibility with its policy

options. Fed also indicated that it would begin lowering its asset purchases later

this year, while interest rate hikes remain still far off. UST rates were volatile

towards the period end and the yield curve flattened as markets factored in

potential interest rate hikes. Furthermore, in November 2021, the Fed Chairman

Jerome Powell hinted at a faster pace of asset purchase tapering to combat

persistent inflation while acknowledging markets concerns about the new

Omicron variant of COVID-19.

8

REVIEW OF TARGET FUND PERFORMANCE DURING THE

FINANCIAL PERIOD

During the review financial period, the target fund* yielded a total return of -

15.00%, underperforming the reference index by 745 bps on a gross basis. Target

fund’s credit component was the primary detractor to relative performance while

high coupon income and overall term structure positioning aided returns.

Target fund’s overweight to property sector weighed the most on relative

performance over the period amid volatility in the Chinese High Yield property

sector. On the rating front, exposure to B rated bonds weighed the most on

relative returns followed by BB rated bonds.

On a credit level, target fund’s overweight in Softbank Group contributed to

relative performance. SoftBank Group Corp. operates as a holding company, and

through its subsidiaries, provides telecommunication services, a variety of

technology services along with operating in investment businesses. Softbank’s

dollar denominated bonds gained after the company’s first quarter (“1Q”) results

were in line with expectations. The company’s asset coverage remains strong,

with loan-to-value (“LTV”) increasing to a still modest 16.00%, versus less than

25.00% financial policy target and a robust liquidity position. Further, Softbank’s

diversified portfolio and increasing share of SoftBank Vision Fund with

investments starting to ramp up further aided sentiments. Bond prices were

further supported after the company unveiled a deal to acquire 4.50% of Deutsche

Telekom in a stock swap deal towards the end of the review period. However, in

November 2021 Softbank Group reported a quarterly loss as a Chinese regulatory

crackdown on tech firms impacted its portfolio.

The target fund’s exposure to SMC Global Power Holdings contributed to

relative returns. The company, an arm of the Filipino conglomerate holding

company San Miguel Corporation, is one of Philippines’ largest power

generators. In July 2021, the company announced it would forgo all future ~1500

MW coal projects initially earmarked in its expansion plans, to instead focus on

investments in solar farms and other renewable energy sources as part of

transition to a low-carbon future. The company also stated that it would be

aggressively pursuing tree planning activities as well as other carbon capture

initiatives to help mitigate climate change. Over November 2021, San Miguel

Corporation’s consolidated net income for the first nine months of year 2021 rose

218.00% over the previous year, while SMC Global Power Holdings’ revenues

were up by 7.00%.

Allocation to Thaioil Treasury Centre aided relative performance. Thai Oil

Treasury Center is primarily involved in providing petroleum refining services.

The company benefitted against the backdrop of rising commodity prices,

specifically rising oil and gas prices. The market for refined oil products has

9

tightened significantly due to recovering demand in Southeast Asian countries

and substitution from expensive Liquefied Natural Gas (“LNG”). Tight supply

and strong demand rebound as economic activity picks up with Thailand looking

to ease COVID-19 restrictions is expected to support energy prices. Thaioil’s

margins are also dependent on global demand which appears to be picking up too.

Conversely, target fund’s overweight in Yango Justice International weighed on

relative performance. Yango’s dollar denominated bond prices fell as Chinese

developers came under pressure amid a broader property sector sell off.

Uncertainty around whether Yango would be able to achieve its sales target over

the year remains key as the Target Fund Manager sees a slowdown in the physical

market and tighter mortgage quota at banks. Both Moody’s and Fitch downgraded

Yango’s bonds in October 2021, citing weakened access to funding and increased

liquidity pressure. Reports that SUNSHI asked holders of an onshore ABS that

was becoming puttable, for a 1-year extension further weighed on sentiments.

Yango’s third quarter of year 2021 (“3Q21”) came in weaker than expected with

cash balance dropped by CNY13.2 billion (“bn”) to CNY27.2 bn, driven by a

combination of debt repayment and slower mortgage release during the quarter.

As a result, cash/ST debt deteriorated to 0.8x from 1.5x as of end-June 2021. It

does raise the repayment risk in the near term especially if the exchange offer is

not successfully completed. The Target Fund Manager is actively engaging with

the company and closely monitoring the situation. Overall, Yango Justice possess

a diversified nationwide portfolio with significant land bank by saleable resources

located in Tier 1 and Tier 2 cities with resilient demand. In November 2021,

Yango sought to extend three of its USD bonds totalling USD747 million, in a

bid to avoid default, citing enormous short-term liquidity pressures. Sentiment

remained supported after the developer later said it has received approval from

bondholders for this transaction.

The target fund’s exposure to Yuzhou Properties detracted from relative returns.

Yuzhou reported an improved set of results in first half of year 2021 (“1H21”)

after a negative surprise with its profit warning for financial year 2020 results

earlier in the year. The developer’s bond prices fell amid persistent volatility in

the Chinese property sector. Over October 2021, Moody’s downgraded the

corporate family rating of Yuzhou Group to B2 from B1 citing weakened funding

access and expectation that its financial metrics over the next 6 months to 12

months are more appropriate for a B2 CFR under the challenging and funding

conditions. In November 2021, Fitch downgraded Yuzhou’s long-term issuer

default rating further to B from B+ and revised its outlook to negative from stable

citing similar reasons. However, Yuzhou’s funding access still appears decent and

liquidity appears adequate, along with a land bank is positioned in higher-tier

cities. Thanks to its close relationship with OCTOWN (second largest

shareholder), the company is in preliminary discussion with both Shenzhen and

Guangzhou SOEs for URP co-development opportunities. However, the

somewhat aggressive revenue recognition has triggered some concerns, and it

10

would need some time to restore market confidence. Concerns whether the

developer will be able to meet its sales target for the year remain. The Target

Fund Manager continues to monitor the company’s corporate governance.

The target fund’s allocation to China Evergrande Group held back gains.

Evergrande bond prices remained volatile with a bias on the downside amid a

slew of negative headlines since late May 2021. Following rumors around

scattered cases of operational issues, in June 2021, negative rating actions ensued

over the month as Fitch and Moody’s downgraded Evergrande’s issuer rating to B

and B2 respectively, on the back of the weakened capital market access amidst

tightening credit condition and execution risk associated with an ambitious debt

reduction plan. Bond prices remained volatile in July 2021 as the local

government of Shaoyang City (Hunan Province) temporarily halted sales of two

of Evergrande’s residential projects, but order was unwound soon after. Volatility

elevated further in July 2021 after a court froze assets of its listed onshore

subsidiary. Ratings agency Standard and Poor (“S&P”) Global downgraded the

group and its subsidiaries’ ratings by two notches to CCC from B- in August

2021 citing faster than expected erosion of Evergrande’s liquidity position than

previously expected. The group’s dollar bonds plunged further in August 2021

after it warned of default risk and legal action from creditors as the company

looks to repair its balance sheet. Evergrande’s bond prices remained under

pressure over September amid continued negative headlines, including multiple

rating downgrades which reflected the possibility of a potential default given the

developer’s tight liquidity, declining contracted sales and limited progress on

asset disposals. However, despite missing initial deadlines, the company made

overdue interest payments on its offshore bonds within the grace period, thus

averting any defaults in November 2021.

*FF Asian High Yield Fund A-ACC-USD

FUND PERFORMANCE REVIEW DURING THE FINANCIAL PERIOD

During the period under review, the fund has generated a return of -15.68%* as

compared with the benchmark return of -7.55%* for USD class. The Fund is

working to meet its objective by providing income and long-term capital growth

* Source: Lipper Investment Management (“Lipper IM”), 10 December 2021

MARKET OUTLOOK AND STRATEGY

Entering year 2022, the Target Fund Manager maintains a broadly constructive

outlook on Asian High Yield market. However, given upcoming maturities,

uncertainty is expected to continue at least until the early stages of year 2022

which will bring volatility. Spreads in the Asian High Yield universe are at levels

rarely reached since the global financial crisis of year 2007 to year 2008 period,

leaving more room for potential spread compression. Income should continue to

11

underpin returns, and the Target Fund Manager expects it to remain a meaningful

driver in year 2022. Credit selection has also been vital - having avoided quite a

few high-profile credit events this year - and the Target Fund Manager’s strategy

is very much steered by bottom-up credit selection. Outside of China, technicals

have generally been well-supported, especially for high-quality names, but the

market’s depth remains relatively shallow. Therefore, it is essential to focus on

names that the Target Fund Manager can hold over a longer time frame through

potential volatility episodes.

China property may offer attractive risk-reward to many investors, driven by the

extremely wide valuations. The sector is still pivotal to the country, accounting

for more than 40.00% of local government revenue and more than 30.00% of

banking system stack. While a complete reversion to a leveraging up and

loosening cycle is less likely, we may see more sector-specific structural changes.

Policymakers in China are expected to strike a delicate balance between

managing downside systematic risk in the property sector while providing an

element of headroom to ensure the more prudent developers survive.

Going into year 2022, it is also worth bearing in mind that the period of explosive

growth for the High Yield property companies is at an end, which is not a bad

thing. A shift in developers’ focus towards the shoring up of cash flow and

leverage is fundamentally positive for bondholders. Accelerated consolidation is

also expected in the market, as bar to compete would be higher and further credit

events are a possibility. As ever, a discerning approach is key to effective sectoral

exposure and issue selection.

Following the recent selloffs, the dollar bonds of some Chinese developers are

offering attractive yields. However, cautious selectivity is the key principle at the

moment, and investors should focus on quality names. Investors will be given a

clearer indication of just how far policymakers are prepared to go in taking aim at

moral hazard. But the Target Fund Manager can already draw some conclusions

based on China’s handling of the crisis to date; first and foremost is that the era of

mainland developers growing ‘too big to fail’ has ended. Strict property

regulation will likely stay, and strong balance sheets should outweigh growth

potential in the sector for years to come.

Regulation has dominated news flow out of China since the end of year 2020.

And despite the media’s focus on the travails of certain companies in the

education sector, the regulatory changes witnessed are in-line with the country’s

focus on longer-term, sustainable growth. Some of the changes will, for example,

provide society with lower education costs, while others aim to make housing

more affordable. What they all have in common is a desire to extricate risk from

China’s economy. Historically, China’s curbs on property development tend to

ease when investment in the sector dips into negative territory, but tolerance for

short-term pain appears higher than expected in the current tightening cycle. The

12

network effects of a further investment slowdown give pause for thought. Land

purchases by developers, a key source of revenue for local governments across

China, would dwindle. And banks would need to make more provisions for bad

loans linked to developers and their suppliers. If developers ran into greater

difficulty completing projects, homebuyers would hold back from taking

mortgages, creating a potentially vicious cycle. Officials would be keen to avoid

letting such a scenario play out.

China’s leadership has demonstrated a higher tolerance of softer growth, but

policymakers are also making it clear that they will ensure there's no hard

economic crash. The Target Fund Manager expects additional policies to help

stabilize growth. For instance, local governments have been encouraged to issue

more bonds for infrastructure development and new low-cost facility were set up

to fund decarbonisation and green initiatives. Additionally, local regulator is

reportedly easing mortgage curbs and asked some major banks to accelerate the

mortgage approvals. Other methods, such as easing home price caps, appear less

likely, given the strong and sustained official rhetoric against speculation in the

sector.

Another crucial aspect is the government’s zero-tolerance policy toward the

COVID-19 pandemic. This is unlikely to be removed before key leadership

meetings during the year and the Winter Olympics in the first quarter of year

2022 (“1Q22”).

The Target Fund Manager continues to monitor key macro trends in Asia namely

vaccination progress and China’s growth trajectory. Sluggish vaccination

progress in countries like Indonesia and India remains concerning as vaccination

remains pivotal for faster economic recovery and doing away with strict

lockdown measures as the risk of further outbreak cannot be ruled out at this

stage. On China’s growth trajectory, while the country led the way in recovery

last year, the Target Fund Manager saw tightening policy bias since second half

of 2020 (“2H20”) on concerns about economy overheating, and regulator

returning to a deleveraging path. Volatilities picking up on several idiosyncratic

headlines in the property and government-related entities space serves to

demonstrate the increasingly visible impact of regulator’s tightening grip, albeit

in a more targeted manner than the last deleverage cycle back in year 2015.

Moving in to the second half of 2021 (“2H21”) faster economic deceleration in

China is apparent based on a series of negative data surprises along with

decelerating credit creation as measure by total social financing. While the

leadership has demonstrated willingness to tolerate short term growth slowdown

to promote longer term goals of common prosperity, policy support is likely even

though a reversion to outright easing seems unlikely. This has prompted the

Chinese government to adopt a more neutral stance versus 1H21 by boosting

liquidity injections and more importantly a 50bps cut in the RRR effective mid-

July 2021. Another key theme are recent signs of potential policy tightening from

13

various major central banks. Tapering is a widely expected event by the market,

and the pace is also in line with consensus. The measured pace maintains a

reasonable level of liquidity provision within the economy in the short-to-

medium term. It also continues to support the search for yield, which is

constructive to high-income asset classes. The relative shorter duration profile

also makes the Target Fund Manager’s strategy less sensitive to any interest rate

risks.

Since the sharp economic deceleration in the 3Q21, the authorities have sent out

positive policy signals incrementally. The probability of a fully-fledged loosening

cycle is low, but policy headroom will support industry segments that have

aligned themselves to the government’s objectives, which in turn would provide

buffer for economic growth.

The Target Fund Manager is conscious of cheap valuations and high income in

Asia High Yield, and pockets of value emerging in this space, for these reasons

the Target Fund Manager remains cautiously positive on the asset class. Defaults

of some onshore local government financing vehicles (“LGFVs”) or local state-

owned enterprises (“SOEs”) or Chinese property issuers have triggered some

concern and it is unsurprising to see negative headlines around idiosyncratic

stories. Against this backdrop, credit selection likely remains extremely critical as

general spreads and yields attempt at compressing and for investors to see

through the potential volatilities and capture return opportunities. Geopolitical

risks could introduce moments of volatility as well. Against these risks, it is

imperative that one takes a long-term view, as market timing will not be easy to

achieve on a sustainable basis. With income generation not only being the focus

but also a key contributor to the total return of the Target Fund Manager’s

strategy, they believe investors will be well-compensated by taking on a longer-

term horizon with their investments into this asset class.

Acknowledging potential volatility and risks, the target fund is overweight credit

beta– offering attractive potential total return driven by high income over next 12

months to 18 months. The Target Fund Manager is cautious of potential outflow

risk and the target fund has been maintaining a high cash buffer of around

10.00% since year-to-date (“YTD”). The latest cash & cash equivalent was

around 12.00%, which reflects the target fund strong focus on liquidity

management.

14

PERFORMANCE DATA

31.05.2021-

30.11.2021

%

Annual Total Returns

Financial Year/Period Ended 31 May

2021

%

2020

%

2019

%

2018

%

2017

%

RHB Asian High Yield Fund -

USD

- Capital Return (17.53) 10.42 (8.63) (0.08) (6.54) 4.11

- Income Return - 4.34 4.34 4.60 5.93 4.64

- Total Return (15.68) 15.21 (4.66) 4.52 (1.00) 8.94

BofA/Merrill Lynch Blended

Index: ACCY, 20% Level 4

Cap 3% Constrained (7.55) 16.69 (1.28) 8.03 0.63 5.83

Average Annual Returns

1 year

30.11.2020-

30.11.2021

%

3 years

30.11.2018-

30.11.2021

%

5 years

30.11.2016-

30.11.2021

%

Since

Inception

28.06.2015**-

30.11.2021

%

RHB Asian High Yield Fund

- USD (11.52) 0.20 (0.11) 1.23

BofA/Merrill Lynch Blended

Index:

ACCY, 20% Level 4 Cap

3% Constrained (3.26) 5.34 3.61 4.46

** Being the last day of the Initial Offer Period

15

Performance of RHB Asian High Yield Fund - USD

for the period from 28 June 2015** to 30 November 2021

Cumulative Return Over The Period (%)

** Being the last day of the Initial Offer Period

Source: Lipper IM, 10 December 2021

The abovementioned performance figures are indicative returns based on daily Net

Asset Value of a unit (as per Lipper Database) since inception.

The calculation of the above returns is based on computation methods of Lipper.

Note : Past performance is not necessarily indicative of future performance and

unit prices and investment returns may go down, as well as up.

The abovementioned performance computations have been adjusted to

reflect distribution payments and unit splits wherever applicable.

16

01.06.2021- Financial Year Ended 31 May

Historical Data 30.11.2021 2021 2020 2019

Unit Prices

NAV - Highest (USD)* 1.0016 1.0158 1.0156 1.0047

- Lowest (USD)* 0.8008 0.9069 0.7886 0.9263

Unit Split - - - -

Others

Management Expense Ratio

(MER) (%) #

- 1.12 1.12 1.23

Portfolio Turnover Ratio (PTR)

(times) ##

- 0.27 0.35 0.75

* The figures quoted are ex-distribution # MER and PTR will not be applicable for quarter report.

Fund Size As at As At 31 May

30.11.2021 2021 2020 2019

Net Asset Value (USD million)* 3.22 4.57 5.92 5.32

Units In Circulation (million) 3.90 4.57 6.53 5.36

Net Asset Value Per Unit (USD)* 0.8256 1.0011 0.9066 0.9922

17

Distribution

Date

Financial Period Ended 30 November

Gross

Distribution

Per Unit

(cent)

Net

Distribution

Per Unit (cent)

NAV before

distribution

(cum)

NAV after

distribution

(ex)

01.06.2021-

30.11.2021

26.08.2021 1.0000 1.0000 0.9670 0.9568

25.11.2021 1.0000 1.0000 0.8565 0.8427

2.0000 2.0000

Financial Year Ended 31 May

Distribution

Date

Gross

Distribution

Per Unit

(cent)

Net

Distribution

Per Unit (cent)

NAV before

distribution

(cum)

NAV after

distribution

(ex)

2021

26.08.2020 1.2000 1.2000 0.9777 0.9668

25.11.2020 1.0000 1.0000 0.9752 0.9683

25.02.2021 1.0000 1.0000 1.0149 1.0037

27.05.2021 1.0000 1.0000 1.0116 1.0022

4.2000 4.2000

2020

27.08.2019 0.6200 0.6200 0.9924 0.9879

27.11.2019 1.0000 1.0000 0.9993 0.9895

25.02.2020 1.2000 1.2000 1.0134 1.0001

28.05.2020 1.3000 1.3000 0.9195 0.9069

4.1200 4.1200

2019

28.08.2018 1.8000 1.8000 0.9865 0.9689

28.11.2018 1.0000 1.0000 0.9369 0.9263

27.02.2019 0.7500 0.7500 0.9797 0.9722

28.05.2019 0.8200 0.8200 1.0000 0.9923

4.3700 4.3700

DISTRIBUTION

During the financial period under review, the Fund has declared total net distribution

of 2.0000 cent per unit, which is equivalent to a net yield of 2.15% based on the

average net asset value for the financial period.

18

PORTFOLIO STRUCTURE

The asset allocations of the Fund as at reporting date were as follows:

As at As at 31 May

30.11.2021 2021 2020 2019

% % % %

Sectors

Collective investment scheme 97.26 97.98 97.22 96.60

Liquid assets and other net

current assets 2.74 2.02 2.78 3.40

100.00 100.00 100.00 100.00

The assets allocation reflects the Fund’s strategy to have maximum exposure to the

investments.

BREAKDOWN OF UNIT HOLDINGS BY SIZE

Account Holders No. Of Units Held*

Size of Holdings No. % (‘000) %

5,000 and below 1 10.00 1 0.03

5,001 to 10,000 - - - -

10,001 to 50,000 3 30.00 114 2.92

50,001 to 500,000 3 30.00 595 15.25

500,001 and above 3 30.00 3,191 81.80

Total 10 100.00 3,901 100.00

* Excluding Manager’s stock

SOFT COMMISSION

The Fund Manager may only receive soft commission in the form of research and

advisory services that assist in the decision-making process relating to the Fund’s

investments.

During the financial period under review, the soft commission received from the

brokers had been retained by the Manager as the goods and services provided are of

demonstrable benefit to the unit holders.

19

RHB ASIAN HIGH YIELD FUND - USD

UNAUDITED STATEMENT OF FINANCIAL POSITION

AS AT 30 NOVEMBER 2021

30.11.2021 31.08.2021

USD USD

ASSETS

Bank balances 74,100 122,684

Investments 3,134,076 3,960,729

Amount due from Fund Manager of collective

investment scheme 26,476 -

Other receivables 2,731 3,334

TOTAL ASSETS 3,237,383 4,086,747

LIABILITIES

Accrued management fee 4,001 5,101

Amount due to Trustee 160 204

Income distribution payable 7,660 6,640

Other payables and accruals 3,231 2,671

TOTAL LIABILITIES 15,052 14,616

NET ASSET VALUE 3,222,331 4,072,131

EQUITY

Unit holders’ capital 4,023,085 4,328,695

Accumulated losses (800,754) (256,564)

3,222,331 4,072,131

UNITS IN CIRCULATION (UNITS) 3,903,010 4,245,222

NET ASSET VALUE PER UNIT

(EX-DISTRIBUTION) (USD) 0.8256

0.9592

20


UNAUDITED STATEMENT OF INCOME AND EXPENSES

FOR THE FINANCIAL PERIOD ENDED 30 NOVEMBER 2021

01.09.2021-

30.11.2021

01.06.2021-

31.08.2021

USD USD

LOSS

Distribution income from investments 45,084 53,051

Net loss on investments (540,333) (178,540)

Net loss on foreign currency exchange (73) (57)

(495,322) (125,546)

EXPENSES

Management fee (9,014) (10,643)

Trustee’s Fee (533) (628)

Audit fee (328) (331)

Tax agent’s fee (232) (235)

Other expenses (99) (229)

(10,206) (12,066)

Net loss before taxation (505,528) (137,612)

Taxation - -

Net loss after taxation (505,528) (137,612)

Net loss after taxation is made up

of the following:

Realised amount (10,616) 28,836

Unrealised amount (494,912) (166,448)

(505,528) (137,612)

21


UNAUDITED STATEMENT OF CHANGES IN NET ASSET VALUE


Unit holders’

capital

Accumulated

losses

Total net

asset value

USD USD USD

Balance as at 1 June 2021 4,648,113 (76,870) 4,571,243

Movement in net asset value:

Net loss after taxation - (137,612) (137,612)

Creation of units arising

from distributions 35,442 - 35,442


from applications 297,008 - 297,008

Cancellation of units (651,868) - (651,868)

Distributions - (42,082) (42,082)

Balance as at 31 August 2021 4,328,695 (256,564) 4,072,131

Balance as at 1 September 2021 4,328,695 (256,564) 4,072,131

Movement in net asset value:

Net loss after taxation - (505,528) (505,528)


from distributions 31,002

-

31,002


from applications 104,983

-

104,983

Cancellation of units (441,595) - (441,595)

Distributions - (38,662) (38,662)

Balance as at 30 November

2021 4,023,085 (800,754) 3,222,331

22


UNAUDITED STATEMENT OF CASH FLOWS


01.09.2021-

30.11.2021

01.06.2021-

31.08.2021

USD USD

CASH FLOWS FROM OPERATING

ACTIVITIES

Proceeds from sale of investments 304,928 542,608

Purchase of investments - (150,000)

Management fee paid (9,521) (10,819)

Trustee’s fee paid (577) (665)

Payment for other fees and expenses (99) (1,140)

Net cash generated from operating activities 294,731 379,984

CASH FLOWS FROM FINANCING

ACTIVITIES

Cash proceeds from units created 104,983 297,008

Cash paid for units cancelled (441,595) (673,916)

Cash paid for income distributions (6,640) (6,294)

Net cash used in financing activities (343,252) (383,202)

Net decrease in cash and cash equivalents (48,521) (3,218)

Effects of foreign exchange (63) (55)

Cash and cash equivalents at the beginning of

the financial period

122,684 125,957

Cash and cash equivalents at the end of

the financial period

74,100 122,684

23

CORPORATE INFORMATION

MANAGER

RHB Asset Management Sdn Bhd

REGISTERED OFFICE

Level 10, Tower One, RHB Centre, Jalan Tun Razak, 50400 Kuala Lumpur

PRINCIPAL AND BUSINESS OFFICE Level 8, Tower Two & Three, RHB Centre, Jalan Tun Razak, 50400 Kuala Lumpur

Email address: [email protected]

Tel: 03-9205 8000

Fax: 03-9205 8100

Website: www.rhbgroup.com

BOARD OF DIRECTORS Mr Yap Chee Meng (Independent Non-Executive Chairman) Mr Chin Yoong Kheong (Senior Independent Non-Executive Director) Ms Ong Yin Suen (Managing Director / Chief Executive Officer)

YBhg Dato’ Darawati Hussain (Independent Non-Executive Director)

YBhg Datuk Seri Dr Govindan A/L Kunchamboo

(Independent Non-Executive Director)

Encik Mohd Rashid Bin Mohamad (Non-Independent Non-Executive Director)

(Appointed with effect from 11 August 2021)

INVESTMENT COMMITTEE MEMBERS Mr Yap Chee Meng (Independent Chairman)

YBhg Dato’ Darawati Hussain

Puan Sharifatu Laila Syed Ali

CHIEF EXECUTIVE OFFICER Ms Ong Yin Suen

SECRETARIES

Encik Azman Shah Md Yaman (LS No. 0006901)

Cik Hasnita Sulaiman (MAICSA No. 7060582)

24

BRANCH OFFICE

Kuala Lumpur Office B-9-6, Megan Avenue 1

No. 189, Jalan Tun Razak

50400 Kuala Lumpur

Tel: 03-2171 2755/ 03-2166 7011

Fax: 03-2770 0022

Shah Alam Office B-3-1, 1st Floor

Jalan Serai Wangi G16/G, Alam Avenue

Persiaran Selangor, Section 16

40200 Shah Alam

Tel: 03-5523 1909 Fax: 03-5524 3471

Sri Petaling Office Level 1 & 2, No 53 Jalan Radin Tengah

Bandar Baru Seri Petaling

57000 Kuala Lumpur

Tel: 03-9054 2470 Fax: 03-9054 0934

Batu Pahat Office 53, 53-A and 53-B Jalan Sultanah

83000 Batu Pahat, Johor

Tel: 07-438 0271/ 07-438 0988

Fax: 07-438 0277

Ipoh Office No.7A, Persiaran Greentown 9

Pusat Perdagangan Greentown

30450 Ipoh, Perak

Tel: 05-242 4311 Fax: 05-242 4312

Johor Bahru Office No 34 Jalan Kebun Teh 1

Pusat Perdagangan Kebun Teh

80250 Johor Bahru, Johor

Tel: 07-221 0129 Fax: 07-221 0291

2nd Floor, 21 & 23

Jalan Molek 1/30, Taman Molek

81100 Johor Bahru, Johor

Tel: 07-358 3587 Fax: 07-358 3581

Kuantan Office 1st Floor, Lot 10, Jalan Putra Square 1

Putra Square

25300 Kuantan, Pahang

Tel: 09-517 3611/ 09-517 3612/ 09-531 6213

Fax: 09-517 3615

25

Kuching Office Lot 133, Section 20, Sublot 2 & 3

1st Floor, Jalan Tun Ahmad Zaidi Adruce

93200 Kuching, Sarawak

Tel: 082-550 838 Fax: 082-550 508

Yung Kong Abell, Units 1-10

2nd Floor Lot 365

Section 50 Jalan Abell

93100 Kuching, Sarawak

Tel: 082-245 611 Fax: 082-230 326

Kota Bharu Office Ground Floor, No 3486-G

Jalan Sultan Ibrahim

15050 Kota Bharu, Kelantan

Tel: 09-740 6891 Fax: 09-740 6890

Kota Kinabalu Office Lot No. C-02-04, 2nd Floor

Block C, Warisan Square

Jalan Tun Fuad Stephens

88000 Kota Kinabalu

Sabah

Tel: 088-528 686/ 088-528 692

Fax: 088-528 685

Melaka Office 581B, Taman Melaka Raya

75000 Melaka

Tel: 06-284 4211/ 06-281 4110

Fax: 06-292 2212

Penang Office 3rd Floor, 44 Lebuh Pantai

10300 Georgetown, Penang

Tel: 04-264 5639 Fax: 04-264 5640

Prai Office No 38, First Floor

Jalan Todak 2

Seberang Jaya

13700 Perai, Penang

Tel: 04-386 6670 Fax: 04-386 6528

26

TRUSTEE HSBC Trustees Malaysia Berhad

BANKER RHB Bank Berhad

AUDITORS PricewaterhouseCoopers PLT

TAX ADVISER PricewaterhouseCoopers Taxation Services Sdn Bhd

DISTRIBUTORS RHB Asset Management Sdn Bhd

RHB Bank Bhd

AmBank Bhd

Areca Capital Sdn Bhd

Citibank Bhd

CUTA-Genexus Advisory Sdn Bhd

HSBC Bank (M) Bhd

iFAST Capital Sdn Bhd

Kenanga Investors Bhd

OCBC Bank (M) Bhd

Phillip Mutual Bhd

Standard Chartered Bank (M) Bhd

UOB Kay Hian Securities (M) Sdn Bhd

RHB ASIAN HIGH YIELD FUND - USD ANNUAL REPORT 2021

Documents

Transcript of RHB ASIAN HIGH YIELD FUND - USD ANNUAL REPORT 2021