FRANKLIN NEXTSTEP D GROWTH FUND CIMANY
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FRANKLIN NEXTSTEP DYNAMIC GROWTH FUND Unaudited Quarterly Report 30 June 2021
FRANKLIN NEXTSTEP DYNAMIC GROWTH FUND
UNAUDITED QUARTERLY REPORT FOR THE FINANCIAL PERIOD ENDING 30 JUNE 2021
I. GENERAL INFORMATION ABOUT THE FUND
II. MANAGER’S REPORT
III. STATEMENT BY THE MANAGER AND UNAUDITED FINANCIAL STATEMENTS FOR
THE FINANCIAL PERIOD FROM 1 OCTOBER 2020 TO 30 JUNE 2021FRANKLIN NEXTSTEP DYNAMIC GROWTH FUND
I. GENERAL INFORMATION ABOUT THE FUND
Launch and Commencement Date
The Franklin NextStep Dynamic Growth Fund (the “Fund”) was launched on 9 July 2018 and
commenced its operations on 26 July 2018.
Fund Name, Category, Type
Fund Name Franklin NextStep Dynamic Growth Fund
Fund Category Mixed Asset (Fund-of-funds)
Fund Type Growth and income
Investment Objective, Policy and Strategy
The Fund is currently available in four share classes, Class A (MYR-H1), Class A (USD), Class A
(SGD-H1) and Class A (AUD-H1). The Fund seeks to achieve long term total return. Total return
includes capital growth and income.
The Fund intends to achieve its objective by investing its NAV principally* in units of UCITS and
other open and closed-end UCIs (including exchange traded funds), managed by Franklin
Templeton Investments entities as well as other asset managers ("Investment Funds"), providing
exposure to equity securities of any market capitalisation (including smaller and mid-sized
companies) as well as fixed or floating-rate debt securities (including investment grade, non-
investment grade or unrated debt securities issued or guaranteed by governments and
corporations, provided that such Investment Fund will not invest more than 10% of its net asset
value in securities issued or guaranteed by any single government or government related issuer
with a credit rating below investment grade at the time of purchase) of issuers located anywhere in
the world, including in the emerging markets, with typically between 25% to 50% of them located
or having their principal business activities in the Asia region.
The Fund invests with no prescribed regional, country, industry sector or market capitalisation limits
for its investment in the Investment Funds. The Fund will seek to maintain an asset allocation
exposure of Investment Funds generally in the range of 60% to 80% for equities and equity-related
securities globally, 20% to 40% for fixed or floating-rate debt securities, and 0% to 10% for
alternative strategies including REITs. These asset allocations may move out of these ranges from
time to time based on market conditions and the Investment Managers of the Fund’s strategic and
tactical asset allocation views.
The Fund may, on an ancillary basis, through its investments in the Investment Funds, be exposed
to convertible securities, credit-linked securities, debt securities on which the issuer is currently (at
the time of purchase) not making principal or interest payments (defaulted debt securities) as well
as securities of companies that are, or are about to be, involved in reorganisations, financial
restructurings, or bankruptcy (restructuring companies).
At least 2% of the Fund’s NAV will be maintained in cash or invested in liquid assets** for the
purposes of, including but not limited to, meeting redemption requests, meeting liquidity needs
and/or defraying Fund’s expenses.
As the Investment Funds are denominated in currencies other than the Base Currency, we may
employ hedging to reduce the Fund’s and the MYR Class’s exposure to foreign exchange
fluctuations. The hedging tools that we may utilise include but are not limited to currency swaps.
The asset allocation of the Fund will be as follows:
• A minimum of 80% of the Fund’s NAV in collective investment schemes; and
• At least 2% of the Fund’s NAV in cash and liquid assets.
We may adopt temporary defensive positions to protect the Fund’s investments to respond to
adverse market, political or economic conditions which may be inconsistent with the Fund’s
principal investment strategy and asset allocation. In such adverse conditions, we may invest all
the assets of the Fund in liquid assets, such as deposits and/or money market instruments, with
due regards to the principal of risk spreading.
1FRANKLIN NEXTSTEP DYNAMIC GROWTH FUND
GENERAL INFORMATION ABOUT THE FUND (CONTINUED)
Fund Distribution Policy
Distribution of income, if any, will be at least on a yearly basis.
* “principally” means at least two-thirds of the Fund’s NAV (without taking into account ancillary
liquid assets) will be invested into the Investment Funds.
** “liquid assets” refers to money market instruments and deposits (including currency fixed
deposits) which has a remaining maturity period of less than 1 year.
2FRANKLIN NEXTSTEP DYNAMIC GROWTH FUND
II. MANAGER’S REPORT
REVIEW OF THE FUND PERFORMANCE DURING THE PERIOD
Global equities rose during the second quarter of 2021, benefitting from extraordinary fiscal and
monetary stimulus from most major economies. North American markets led global gains, although
Europe and emerging markets (EMs) also posted healthy returns. Subdued gains in China ensured
Asian EMs lagged the other regions. The Caixin China General Manufacturing PMI edged down to
a three-month low in June, as Chinese firms indicated that the recent uptick in COVID-19 cases
alongside supply chain difficulties had weighed on output.
Benchmark 10-year US Treasury yields fell across the quarter, as the transitory nature of inflation
became more apparent, despite ‘risk-on’ sentiment. Credit markets rose during the quarter, amid
spread tightening, helped by falling US Treasury yields. EM debt also rose, led by sovereign issues,
as risk appetite remained healthy, while oil prices benefitted from falling US stockpiles. The US
dollar fell slightly versus other major currencies, despite surging higher in June on hawkish
language from the US Federal Reserve (Fed).
We slightly reduced our overweight position in equities during the second quarter, moderating
optimism as we believe the economic recovery is already largely priced into markets. As a result,
we added to fixed income, while maintaining cash holdings.
We reduced our overweight position in US equities during the quarter, as the synchronisation of
global growth accelerated. As a result, we added to European equity holdings, given the region’s
improved economic outlook. In contrast, we reduced exposure to Japan and EMs due to ongoing
problems with COVID-19 infections and patchy vaccine rollout. Localised inflationary pressures
have also adversely affected EM equities, whilst slowing growth in China influenced our decision to
trim positions in the Pacific ex-Japan region.
We retained our short-duration positioning during the quarter given the positive global outlook for
growth and the likelihood that rates will rise over a medium-term horizon. We also remained
constructive on high-yield and EM bonds due to sustained risk appetite.
Cross-asset allocation contributed to relative performance, as our
overweight to equities, funded via an underweight to fixed income,
benefitted results on improving global risk appetite. An allocation to cash
for liquidity purposes detracted.
Regional equity allocation detracted from relative results, particularly an
overweight to Japanese equities, which suffered from the country’s
ineffective response to rising COVID-19 infections. An underweight to
Asset Allocation Europe also detracted, as the region’s economy strengthened in the
second quarter, while a slight overweight to EMs proved a further drag.
Losses were offset slightly by an overweight to the US and an underweight
to the Pacific ex-Japan region.
Within fixed income, an overweight to high-yield bonds added relative
value, benefitting from narrowing spreads, although US short-duration
positioning modestly held back performance, as the yield curve flattened
during the quarter.
Franklin US Opportunities Fund and Pioneer US Equity Fundamental
Growth Fund benefitted relative results due to an emphasis on growth
Equity Fund
stocks, which outperformed their value counterparts, despite the ongoing
Selection
cyclical rebound. This was partially offset by MSCI USA Value ETF, which
suffered from exposure to value stocks.
3FRANKLIN NEXTSTEP DYNAMIC GROWTH FUND
MANAGER’S REPORT (CONTINUED)
Franklin US Opportunities Fund outperformed its benchmark Russell 1000
Growth Index, due to strong stock selection and an advantageous
environment for aggressive growth portfolios. Selection within the
information technology and consumer discretionary sectors contributed.
Fidelity European Larger Companies Fund detracted from relative results
due to the underperformance of quality and value stocks over the period.
Allocation to financials, consumer staples and health care stocks detracted
from relative results, while Templeton Asian Growth Fund suffered from an
underweight to the health care sector and selection amongst consumer
discretionary stocks.
iShares USD Treasury Bond 7-10 Year ETF and Franklin Liberty USD
Fixed Income
Investment Grade Corporate Bond Fund both contributed due to
Fund Selection
intermediate duration exposures, as yields fell during the quarter.
OUTLOOK & STRATEGY
The global economy continues to benefit from a strong cyclical expansion, and we remain confident
that a stimulative mix of easy monetary policy and generous fiscal support should build an
increasingly synchronised global expansion. Against this background, we favour risk assets
generally and maintain an asset allocation tilt toward stocks over bonds, although our modest
preference for equities reflects the fact that most markets have already priced in improved economic
data.
Within equities, we prefer countries that are experiencing the “point of inflection” in the vaccine
rollout. During the next few months, that will likely include Japan and other parts of developed Asia.
We remain neutral on Europe, which is still playing catch-up with the larger leading vaccine nations
such as the United States, while supplies for many EM economies remain deficient. Fiscal stimulus
is a key driver of growth in the US, particularly infrastructure spending, leading us to remain
optimistic on US equities, despite high valuations. China’s equity market continues to lag the gains
seen in the broader global indexes, and we see this trend as one that is likely to persist. As a result,
we extended our more cautious stance toward China and EM equities more broadly.
The trajectory of global economic recovery has raised concerns around escalating inflation,
although we believe this is not problematic. The level of anticipated inflation in the US remains
elevated during the next few years but drops off beyond a five-year horizon, broadly consistent with
the Fed’s objectives. Equally, when we look at similar expected inflation measures in Europe and
Japan, we see a more muted picture still.
We retain a cautious view on US Treasuries, despite the apparently transitory nature of inflation, as
fiscal stimulus and improving economic data helps to maintain upward pressure on yields. In
Europe, an expectation of strong vaccine-related growth is supporting yields, while the low
sensitivity of Japanese bonds to global yields makes them more attractive as a diversifier.
Elsewhere, we remain concerned about investment-grade credit, due to narrow spreads in a rising
rates environment, and prefer high-yield bonds. We also like EM debt, particularly local-currency
issues that benefit from attractive valuations, although selective positioning is important.
4FRANKLIN NEXTSTEP DYNAMIC GROWTH FUND
MANAGER’S REPORT (CONTINUED)
Asset Breakdown as at end June 2021
Equity 78.32%
Fixed Income 20.15%
Cash & Other Net Assets 1.53%
CUMULATIVE RETURNS AS OF 30 JUNE 2021*
Since
Currency 3 Months 6 Months 1 Year Commencement
(26 July 2018)
Franklin NextStep
Dynamic Growth Fund – MYR 3.44% 6.18% 27.65% 24.48%
Class A
Franklin NextStep
Dynamic Growth Fund – AUD 3.02% 5.02% 24.01% 16.64%
Class A
Franklin NextStep
Dynamic Growth Fund – SGD 3.11% 5.43% 25.45% 16.84%
Class A
Franklin NextStep
Dynamic Growth Fund – USD 3.20% 5.63% 26.77% 23.88%
Class A
Blended Benchmark** USD 4.54% 6.74% 29.46% 37.25%
Past performance is not necessarily indicative of future performance and unit prices and investment
returns may go down, as well as up.
*Source: Franklin Templeton. Source for indexes: FactSet.
**The benchmark is a blend of 40% MSCI AC Asia Pacific Ex-Japan, 35% MSCI ACWI, 20% Bloomberg
Barclays Multiverse (hedged to USD) and 5% JPM GBI-EM Broad Diversified Asia Index.
All MSCI data is provided “as is.” The fund described herein is not sponsored or endorsed by MSCI. In
no event shall MSCI, its affiliates or any MSCI data provider have any liability of any kind in connection
with the MSCI data or the Fund described herein. Copying or redistributing the MSCI data is strictly
prohibited.
Indexes are unmanaged and one cannot invest directly in an index. They do not reflect any fees,
expenses or sales charges.
Statement on Soft Commission
The Manager and the Trustee will not retain any rebates from, or otherwise share in, any commission
with any dealer in consideration for directing dealings in the investments of the Fund. The Manager
retains soft commissions received from brokers only if the goods and services are of demonstrable
benefits to the unitholders as allowed under the regulations.
5FRANKLIN NEXTSTEP DYNAMIC GROWTH FUND
MANAGER’S REPORT (CONTINUED)
Note:
The performance benchmark of Franklin NextStep Dynamic Growth Fund will be updated as
follows with effect from 30 September 2021 (or such other date as may be determined by the
Manager):
Performance Benchmark Performance Benchmark
Fund
(current) (new)
Blended 40% MSCI AC Asia
Blended 40% MSCI AC Asia
Pacific Ex-Japan Net Returns
Pacific Ex-Japan + 35% MSCI
+ 35% MSCI ACWI Net
Franklin NextStep Dynamic ACWI + 20% Bloomberg
Returns + 20% Bloomberg
Growth Fund Barclays Multiverse (hedged
Barclays Multiverse (hedged
to USD) + 5% JPM GBI-EM
to USD) + 5% JPM GBI-EM
Broad Diversified Asia Index
Broad Diversified Asia Index
The Net Return benchmarks are used to more accurately reflect actual investors’ experience.
6FRANKLIN NEXTSTEP DYNAMIC GROWTH FUND
III. STATEMENT BY THE MANAGER AND UNAUDITED FINANCIAL STATEMENTS
FOR THE FINANCIAL PERIOD FROM 1 OCTOBER 2020 TO 30 JUNE 2021
CONTENTS PAGE(S)
UNAUDITED STATEMENT OF FINANCIAL POSITION 1
UNAUDITED STATEMENT OF COMPREHENSIVE INCOME 2
UNAUDITED STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE
TO UNIT HOLDERS 3
UNAUDITED STATEMENT OF CASH FLOWS 4
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS 5 - 14
STATEMENT BY THE MANAGER 15FRANKLIN NEXTSTEP DYNAMIC GROWTH FUND
UNAUDITED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
30 Jun 2021 30 Sep 2020
Note RM RM
CURRENT ASSETS
Financial assets at fair value through
profit or loss 1 18,256,901 20,061,549
Derivative financial instruments 2 806 97,577
Due from brokers 3 872,399 797,342
Other receivables 4 2,032 1,583
Cash and cash equivalents 5 328,085 286,320
TOTAL ASSETS 19,460,223 21,244,371
CURRENT LIABILITIES
Derivative financial instruments 2 59,278 -
Due to brokers 3 820,246 769,007
Accrued management fee 6 20,647 22,266
Accrued trustee fee 7 1,480 1,475
Other payables and accruals 18,568 23,126
TOTAL LIABILITIES (EXCLUDING NET
ASSETS ATTRIBUTABLE TO UNIT
HOLDERS) 920,219 815,874
NET ASSETS ATTRIBUTABLE TO UNIT
HOLDERS 18,540,004 20,428,497
REPRESENTED BY:
NET ASSETS ATTRIBUTABLE TO UNIT
HOLDERS
– AUD-H1 CLASS 8(a) 4,297,666 7,184,523
– MYR-H1 CLASS 8(b) 7,260,487 8,060,887
– SGD-H1 CLASS 8(c) 1,853,192 1,544,511
– USD CLASS 8(d) 5,128,659 3,638,576
18,540,004 20,428,497
NUMBER OF UNITS IN CIRCULATION
– AUD-H1 CLASS 8(a) 2,365,064.85 4,820,399.34
– MYR-H1 CLASS 8(b) 11,665,046.40 15,354,450.47
– SGD-H1 CLASS 8(c) 1,027,506.75 1,018,660.05
– USD CLASS 8(d) 1,995,063.95 1,666,714.95
NET ASSET VALUE PER UNIT
– AUD-H1 CLASS AUD 0.5832 AUD 0.5008
– MYR-H1 CLASS RM 0.6224 RM 0.5250
– SGD-H1 CLASS SGD 0.5842 SGD 0.4985
– USD CLASS USD 0.6194 USD 0.5257
The accompanying notes form an integral part of these financial statements.
1FRANKLIN NEXTSTEP DYNAMIC GROWTH FUND
UNAUDITED STATEMENT OF COMPREHENSIVE INCOME
FOR THE FINANCIAL PERIOD FROM 1 OCTOBER 2020 TO 30 JUNE 2021
1 Oct 2020 1 Oct 2019
to to
30 Jun 2021 30 Jun 2020
Note RM RM
INVESTMENT INCOME
Interest income 193 291
Dividend income 73,519 83,432
Net gain from financial assets at fair value
through profit or loss 1 3,412,415 576,931
Net gain/(loss) from derivative financial
instruments 2 409,112 (424,810)
Net foreign currency exchange (loss)/gain (18,394) 16,438
3,876,845 252,282
EXPENSES
Management fee 6 198,896 207,124
Trustee fee 7 13,464 13,507
Audit fee 8,984 11,120
Professional fee 4,190 4,206
Custodian fee 4,001 3,588
Printing fee 2,137 7,486
Transaction costs 30,331 20,499
Other expenses 40 773
262,043 268,303
NET INCOME/(LOSS) BEFORE TAXATION 3,614,802 (16,021)
Taxation - -
INCREASE/(DECREASE) IN NET ASSETS
ATTRIBUTABLE TO UNIT HOLDERS 3,614,802 (16,021)
Increase/(decrease) in net assets attributable to
unit holders comprises the following:
Realised amount 2,361,248 (278,886)
Unrealised amount 1,253,554 262,865
3,614,802 (16,021)
The accompanying notes form an integral part of these financial statements.
2FRANKLIN NEXTSTEP DYNAMIC GROWTH FUND
UNAUDITED STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO UNIT HOLDERS
FOR THE FINANCIAL PERIOD FROM 1 OCTOBER 2020 TO 30 JUNE 2021
1 Oct 2020 1 Oct 2019
to to
30 Jun 2021 30 Jun 2020
RM RM
NET ASSETS ATTRIBUTABLE TO UNIT
HOLDERS AT THE BEGINNING OF
THE FINANCIAL PERIOD 20,428,497 21,047,759
Movement due to units created and cancelled
during the financial period:
Creation of units 4,401,849 3,341,573
Cancellation of units (9,905,144) (3,867,928)
(5,503,295) (526,355)
Increase/(decrease) in net assets attributable to
unit holders during the financial period 3,614,802 (16,021)
NET ASSETS ATTRIBUTABLE TO UNIT
HOLDERS AT THE END OF THE
FINANCIAL PERIOD 18,540,004 20,505,383
The accompanying notes form an integral part of these financial statements.
3FRANKLIN NEXTSTEP DYNAMIC GROWTH FUND
UNAUDITED STATEMENT OF CASH FLOWS
FOR THE FINANCIAL PERIOD FROM 1 OCTOBER 2020 TO 30 JUNE 2021
1 Oct 2020 1 Oct 2019
to to
30 Jun 2021 30 Jun 2020
Note RM RM
CASH FLOWS FROM OPERATING
ACTIVITIES
Proceeds from sales of financial assets at
fair value through profit or loss 15,059,376 12,684,370
Payment for purchase of financial assets
at fair value through profit or loss (9,887,799) (10,970,646)
Settlement of derivative financial instruments 565,161 (456,812)
Interest income received 193 291
Dividend income received 73,519 83,432
Management fee paid (200,515) (207,955)
Rebates received 3,996 6,528
Trustee fee paid (13,459) (13,511)
Professional fee paid (5,606) -
Audit fee paid (11,978) (15,264)
Custodian fee paid (4,001) (3,588)
Printing fee paid (2,285) (3,145)
Transaction costs paid (30,331) (20,499)
Other expenses paid (40) (773)
Net cash generated from
operating activities 5,546,231 1,082,428
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from creation of units 4,401,849 3,343,524
Payments for cancellation of units (9,905,144) (4,018,085)
Net cash used in financing activities (5,503,295) (674,561)
NET INCREASE IN CASH AND
CASH EQUIVALENTS 42,936 407,867
CASH AND CASH EQUIVALENTS AT
BEGINNING OF FINANCIAL PERIOD 286,320 484,988
EFFECTS OF UNREALISED FOREIGN
EXCHANGE (1,171) (186)
CASH AND CASH EQUIVALENTS AT
END OF FINANCIAL PERIOD 5 328,085 892,669
The accompanying notes form an integral part of these financial statements.
4FRANKLIN NEXTSTEP DYNAMIC GROWTH FUND
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
FOR THE FINANCIAL PERIOD FROM 1 OCTOBER 2020 TO 30 JUNE 2021
1. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
30 Jun 2021 30 Sep 2020
RM RM
Financial assets at fair value through profit or loss:
- Foreign collective investment schemes 9,279,307 10,129,580
- Quoted exchange traded funds 8,977,594 9,931,969
18,256,901 20,061,549
1 Oct 2020 to 1 Oct 2019 to
30 Jun 2021 30 Jun 2020
RM RM
Net gain on financial assets at fair value through
profit or loss:
- Realised gain on disposals 2,001,732 345,881
- Unrealised fair value gain 1,410,683 231,050
3,412,415 576,931
Realised fair value gains includes rebates received/receivable from the underlying investment funds.
The detailed portfolio of investment is disclosed in Note 14 to the financial statements.
2. DERIVATIVE FINANCIAL INSTRUMENTS
Foreign currency swaps
As at 30 June 2021 and 30 September 2020, the notional principal amount of the outstanding foreign currency
swaps amounted as per following:
30 Jun 2021 AUD-H1 MYR-H1 SGD-H1
RM RM RM
Notional value 4,210,870 6,980,140 1,783,603
30 Sep 2020 AUD-H1 MYR-H1 SGD-H1
RM RM RM
Notional value 6,914,017 7,721,786 1,484,030
The foreign currency swaps entered into during the financial period were for hedging against the currency
exposures arising from the underlying investment funds denominated in currencies other than US Dollars.
30 Jun 2021 AUD-H1 MYR-H1 SGD-H1 Total
RM RM RM RM
Financial assets at fair value
through profit or loss
- Foreign currency swaps - 806 - 806
5
#FRANKLIN NEXTSTEP DYNAMIC GROWTH FUND
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS (CONTINUED)
FOR THE FINANCIAL PERIOD FROM 1 OCTOBER 2020 TO 30 JUNE 2021
2. DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
30 Jun 2021 AUD-H1 MYR-H1 SGD-H1 Total
RM RM RM RM
Financial liabilities at fair
value through profit or loss
- Foreign currency swaps 53,611 - 5,667 59,278
30 Sep 2020 AUD-H1 MYR-H1 SGD-H1 Total
RM RM RM RM
Financial assets at fair value
through profit or loss
- Foreign currency swaps 71,025 19,452 7,100 97,577
As the Fund has not adopted hedge accounting during the financial period, the change in the fair value of the
foreign currency swaps are recognised immediately in the statement of comprehensive income during the
financial period.
Net fair value gain/(loss) on the foreign currency swaps at fair value through profit or loss are as follows:
1 Oct 2020 to 1 Oct 2019 to
30 Jun 2021 30 Jun 2020
RM RM
Net realised gain/(loss) on foreign currency swaps 565,161 (456,812)
Net unrealised (loss)/gain on foreign currency swaps (156,049) 32,002
409,112 (424,810)
3. DUE FROM/TO BROKERS
30 Jun 2021 30 Sep 2020
RM RM
Amount due from brokers 872,399 797,342
Amount due to brokers 820,246 769,007
The amount due from/to the brokers was for the sale/purchase of investments where settlement was not due.
4. OTHER RECEIVABLES
Other receivables comprise of rebates that will be received from the underlying investment funds. Such rebates
may vary, depending on the value and tenure of the underlying investment funds held, and are based on rates
agreed with the managers of the underlying investment funds.
6#FRANKLIN NEXTSTEP DYNAMIC GROWTH FUND
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS (CONTINUED)
FOR THE FINANCIAL PERIOD FROM 1 OCTOBER 2020 TO 30 JUNE 2021
5. CASH AND CASH EQUIVALENTS
30 Jun 2021 30 Sep 2020
RM RM
Bank balances in a licensed financial institution 328,085 286,320
6. ACCRUED MANAGEMENT FEE
Expense Accrual
1 Oct 2020 to 1 Oct 2019 to
30 Jun 2021 30 Jun 2020 30 Jun 2021 30 Sep 2020
RM RM RM RM
Management fee 198,896 207,124 20,647 22,266
For the current period, the Manager is entitled to receive a fee of 1.35% per annum of the net asset value of the
Fund.
Management fees are billed and payable monthly in arrears.
7. ACCRUED TRUSTEE FEE
Expense Accrual
1 Oct 2020 to 1 Oct 2019 to
30 Jun 2021 30 Jun 2020 30 Jun 2021 30 Sep 2020
RM RM RM RM
Trustee fee 13,464 13,507 1,480 1,475
For the current period, the Trustee is entitled to receive a fee of 0.08% per annum of the net asset value of the
Fund, subject to a minimum fee of RM18,000 per annum.
Trustee fees are billed and payable monthly in arrears.
7
#FRANKLIN NEXTSTEP DYNAMIC GROWTH FUND
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS (CONTINUED)
FOR THE FINANCIAL PERIOD FROM 1 OCTOBER 2020 TO 30 JUNE 2021
8. NET ASSETS ATTRIBUTABLE TO UNIT HOLDERS
(a) AUD-H1 CLASS
30 Jun 2021 30 Sep 2020
Number of Number of
units RM units RM
Beginning balance 4,820,399.34 7,184,523 4,078,740.24 5,617,569
Creation 518,207.47 883,449 1,284,008.46 1,827,779
Cancellation (2,973,541.96) (5,094,420) (542,349.36) (723,503)
Increase
in net assets
attributable
to unit holders - 1,324,114 - 462,678
Closing balance 2,365,064.85 4,297,666 4,820,399.34 7,184,523
(b) MYR-H1 CLASS
30 Jun 2021 30 Sep 2020
Number of Number of
units RM units RM
Beginning balance 15,354,450.47 8,060,887 21,506,379.55 10,476,140
Creation 3,832,817.77 2,342,635 3,018,777.69 1,571,449
Cancellation (7,522,221.84) (4,466,041) (9,170,706.77) (4,576,569)
Increase
in net assets
attributable
to unit holders - 1,323,006 - 589,867
Closing balance 11,665,046.40 7,260,487 15,354,450.47 8,060,887
(c) SGD-H1 CLASS
30 Jun 2021 30 Sep 2020
Number of Number of
units RM units RM
Beginning balance 1,018,660.05 1,544,511 1,014,420.27 1,446,343
Creation 180,196.66 324,814 253,582.96 388,151
Cancellation (171,349.96) (300,417) (249,343.18) (367,807)
Increase
in net assets
attributable
to unit holders - 284,284 - 77,824
Closing balance 1,027,506.75 1,853,192 1,018,660.05 1,544,511
8#FRANKLIN NEXTSTEP DYNAMIC GROWTH FUND
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS (CONTINUED)
FOR THE FINANCIAL PERIOD FROM 1 OCTOBER 2020 TO 30 JUNE 2021
8. NET ASSETS ATTRIBUTABLE TO UNIT HOLDERS (CONTINUED)
(d) USD CLASS
30 Jun 2021 30 Sep 2020
Number of Number of
units RM units RM
Beginning balance 1,666,714.95 3,638,576 1,728,580.95 3,507,707
Creation 348,178.94 850,951 - -
Cancellation (19,829.94) (44,266) (61,866.00) (137,463)
Increase
in net assets
attributable
to unit holders - 683,398 - 268,332
Closing balance 1,995,063.95 5,128,659 1,666,714.95 3,638,576
9. UNITS HELD BY PARTIES RELATED TO MANAGER
30 Jun 2021 30 Sep 2020
Number of Number of
units RM units RM
Holding company of the
Manager
- Franklin Templeton
Capital Holdings
Pte. Ltd.
- AUD-H1 class 268,889.48 488,608 268,889.48 400,748
- MYR-H1 class 812,200.00 505,513 812,200.00 426,405
- SGD-H1 class 272,100.00 490,760 272,100.00 412,595
- USD class 1,400,000.00 3,598,714 1,400,000.00 3,056,525
The above units are legally held and were transacted at the prevailing market price.
Other than the above, there were no units held by Directors or parties related to the Manager.
10. DISTRIBUTION
No distribution was declared by the Fund for the financial periods ended 30 June 2021 and 2020.
11. MANAGEMENT EXPENSE RATIO (“MER”)
1 Oct 2020 to 1 Oct 2019 to
30 Jun 2021 30 Jun 2020
% %
MER 1.65 1.68
The MER of the Fund is the ratio of the sum of annualised fees and expenses incurred by the Fund to the average
net asset value of the Fund calculated on a daily basis.
9#FRANKLIN NEXTSTEP DYNAMIC GROWTH FUND
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS (CONTINUED)
FOR THE FINANCIAL PERIOD FROM 1 OCTOBER 2020 TO 30 JUNE 2021
12. PORTFOLIO TURNOVER RATIO (“PTR”)
The PTR of the Fund, which is the ratio of average total acquisitions and disposals of investment to the average
net asset value of the Fund calculated on a daily basis is 0.63 times (30 June 2020: 0.59 times).
13. TRANSACTIONS WITH RELATED PARTIES
Details of transactions with related parties for the financial period are as follows:
1 Oct 2020 to 1 Oct 2019 to
30 Jun 2021 30 Jun 2020
RM % RM %
Franklin Advisers, Inc.* 1,363,579 28.02 3,522,030 37.82
Franklin Advisory
Services LLC* - - 2,119,134 22.75
Franklin Advisory Services
LLC and Franklin
Templeton Investment
Management Limited * 958,192 19.69 - -
Franklin Mutual
Advisers, LLC* - - 436,739 4.69
Templeton Asset
Management Ltd.* 1,979,613 40.68 2,778,358 29.83
Deutsche Bank
(Malaysia) Berhad** 565,161 11.61 456,812 4.91
Total 4,866,545 100.00 9,313,073 100.00
* Trades conducted with related parties of the Manager amounted to RM4,301,384 (30 June 2020:
RM8,856,261). The transaction values are in respect of transactions in foreign collective investment schemes and
exchange traded funds.
** Trades conducted with Deutsche Bank (Malaysia) Berhad amounted to RM565,161 (30 June 2020:
RM456,812). The transaction values are in respect of transactions in the foreign currency swaps.
The Manager is of the opinion that all transactions with the related company have been entered into in the
normal course of business at agreed terms between the related parties.
10
#FRANKLIN NEXTSTEP DYNAMIC GROWTH FUND
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS (CONTINUED)
FOR THE FINANCIAL PERIOD FROM 1 OCTOBER 2020 TO 30 JUNE 2021
14. PORTFOLIO OF INVESTMENTS
(a) Foreign collective investment schemes
Percentage
Name of collective Aggregate Market of net
investment schemes Quantity cost value asset value
30 Jun 2021 Units RM RM %
Amundi Funds - Pioneer US
Equity Fundamental
Growth I2 USD C 15 422,142 648,715 3.50
Eastspring Investments -
Asian Local Bond Fund - C 9,167 472,726 490,326 2.64
Fidelity Funds - Asian
Special Situations
Fund Y - Acc - USD 10,361 974,805 1,364,343 7.36
Fidelity Funds - European
Larger Companies
Fund Y - EUR 7,602 528,381 556,958 3.00
Franklin U.S. Low Duration
Fund - Y (Mdis) USD 7,241 297,114 303,194 1.64
Franklin U.S. Opportunities
Fund - Y (Mdis) USD 5,836 528,824 645,156 3.48
JPMorgan Funds -
Aggregate Bond Fund
I (Acc) USD 1,314 728,584 744,542 4.02
Ninety One GSF - Asian
Equity Fund I Acc USD 9,167 1,214,019 1,622,578 8.75
Robeco High Yield Bonds
IH USD 158 182,889 218,659 1.18
Templeton Asian Bond
Fund - Y (Mdis) USD 5,894 224,510 210,123 1.13
Templeton Asian Growth
Fund - Y (Mdis) USD 38,209 1,906,182 2,292,891 12.37
Templeton Global Total Return
Fund - Y (Mdis) USD 5,720 216,363 181,822 0.98
Total collective
investment schemes 7,696,539 9,279,307 50.05
Accumulated unrealised gain on
financial assets at fair value
through profit or loss 1,582,768
Total collective investment schemes
at fair value through profit or loss 9,279,307
11
#FRANKLIN NEXTSTEP DYNAMIC GROWTH FUND
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS (CONTINUED)
FOR THE FINANCIAL PERIOD FROM 1 OCTOBER 2020 TO 30 JUNE 2021
14. PORTFOLIO OF INVESTMENTS (CONTINUED)
(b) Quoted exchange traded funds
Name of quoted Percentage
exchange traded Aggregate Market of net
funds Quantity cost value asset value
30 Jun 2021 Units RM RM %
Amundi MSCI EM Asia
UCITS ETF - USD (C) 9,350 1,649,505 1,832,254 9.88
Franklin LibertyQ U.S.
Equity UCITS ETF 4,150 599,644 755,551 4.08
Franklin Liberty USD Investment
Grade Corporate Bond UCITS
ETF 3,470 404,883 410,270 2.21
iShares Core MSCI Japan
IMI UCITS ETF USD 2,785 530,336 593,375 3.20
iShares Core MSCI Pacific
ex- Japan UCITS ETF
USD (Acc) 1,850 1,129,404 1,400,146 7.55
iShares Core S&P 500
UCITS ETF USD (Acc) 950 1,374,148 1,718,693 9.27
iShares Global Aggregate
Bond UCITS ETF
Hedged USD (Acc) 31,120 723,922 734,981 3.96
iShares MSCI Europe
UCITS ETF EUR (Dist) 4,020 504,978 551,790 2.98
iShares $ Treasury Bond
7-10yr UCITS ETF
USD (Dist) 505 432,008 442,539 2.39
UBS MSCI USA Value UCITS
ETF (USD) A Dis GBP 1,370 466,261 537,995 2.90
Total quoted exchange
traded funds 7,815,089 8,977,594 48.42
Accumulated unrealised gain on
financial assets at fair value
through profit or loss 1,162,505
Total quoted exchange traded funds
at fair value through profit or loss 8,977,594
Total investments 18,256,901
12
#FRANKLIN NEXTSTEP DYNAMIC GROWTH FUND
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS (CONTINUED)
FOR THE FINANCIAL PERIOD FROM 1 OCTOBER 2020 TO 30 JUNE 2021
14. PORTFOLIO OF INVESTMENTS (CONTINUED)
(a) Foreign collective investment schemes
Percentage
Name of collective Aggregate Market of net
investment schemes Quantity cost value asset value
30 Sep 2020 Units RM RM %
Amundi Funds - Pioneer US
Equity Fundamental
Growth I2 USD C 24 659,262 855,690 4.19
Eastspring Investments -
Asian Local Bond Fund - C 9,203 470,112 488,388 2.39
Fidelity Funds - Asian
Special Situations
Fund Y - Acc - USD 16,611 1,522,215 1,726,720 8.45
Fidelity Funds - European
Larger Companies
Fund Y - EUR 8,781 572,445 520,979 2.55
Franklin U.S. Low Duration
Fund - Y (Mdis) USD 9,379 384,835 386,384 1.89
Franklin U.S. Opportunities
Fund - Y (Mdis) USD 4,147 364,625 364,625 1.79
JPMorgan Funds -
Aggregate Bond Fund
I (Acc) USD 1,698 941,439 945,968 4.63
Ninety One GSF - Asian
Equity Fund I Acc USD 15,072 1,931,926 2,102,509 10.29
Robeco High Yield Bonds
IH USD 158 182,889 202,977 0.99
Templeton Asian Bond
Fund - Y (Mdis) USD 8,744 336,330 325,376 1.59
Templeton Asian Growth
Fund - Y (Mdis) USD 39,613 1,806,682 1,964,294 9.62
Templeton Global Total Return
Fund - Y (Mdis) USD 7,422 283,079 245,670 1.20
Total collective
investment schemes 9,455,839 10,129,580 49.58
Accumulated unrealised gain on
financial assets at fair value
through profit or loss 673,741
Total collective investment schemes
at fair value through profit or loss 10,129,580
13
#FRANKLIN NEXTSTEP DYNAMIC GROWTH FUND
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS (CONTINUED)
FOR THE FINANCIAL PERIOD FROM 1 OCTOBER 2020 TO 30 JUNE 2021
14. PORTFOLIO OF INVESTMENTS (CONTINUED)
(b) Quoted exchange traded funds
Name of quoted Percentage
exchange traded Aggregate Market of net
funds Quantity cost value asset value
30 Sep 2020 Units RM RM %
Amundi MSCI EM Asia
UCITS ETF - USD (C) 12,750 1,783,155 2,019,807 9.89
Franklin LibertyQ
U.S. Equity UCITS ETF 8,350 1,193,325 1,222,037 5.98
Franklin Liberty USD
Investment Grade
Corporate Bond
UCITS ETF 4,170 486,332 500,317 2.45
Invesco EQQQ NASDAQ
-100 UCITS ETF Dist 425 428,844 495,549 2.43
iShares Core MSCI Japan
IMI UCITS ETF USD 1,940 349,259 360,301 1.76
iShares Core MSCI Pacific
ex- Japan UCITS ETF
USD (Acc) 2,135 1,242,873 1,240,002 6.07
iShares Core S&P 500
UCITS ETF USD (Acc) 1,395 1,726,268 1,967,566 9.63
iShares Global Aggregate
Bond UCITS ETF
Hedged USD (Acc) 41,970 957,527 997,701 4.88
iShares MSCI Europe
UCITS ETF EUR (Dist) 5,120 574,416 552,847 2.71
iShares $ Treasury Bond
7-10yr UCITS ETF
USD (Dist) 620 529,121 575,842 2.82
Total quoted exchange
traded funds 9,271,120 9,931,969 48.62
Accumulated unrealised gain on
financial assets at fair value
through profit or loss 660,849
Total quoted exchange traded funds
at fair value through profit or loss 9,931,969
Total investments 20,061,549
14
#FRANKLIN NEXTSTEP DYNAMIC GROWTH FUND
STATEMENT BY THE MANAGER
I, Avinash Deepak Satwalekar, being the Director of the Manager, Franklin Templeton Asset Management
(Malaysia) Sdn. Bhd., for Franklin NextStep Dynamic Growth Fund do hereby state that in the opinion of
the Manager, the accompanying unaudited statement of financial position, unaudited statement of
comprehensive income, unaudited statement of changes in net assets attributable to unit holders and
unaudited statement of cash flows are drawn up so as to give a true and fair view of the financial position of the
Fund as at 30 June 2021 and the comprehensive income, the changes in net assets attributable to unit holders
and cash flows of the Fund for the financial period from 1 October 2020 to 30 June 2021.
Avinash Deepak Satwalekar
For and on behalf of the Manager
Franklin Templeton Asset Management
(Malaysia) Sdn. Bhd.
Kuala Lumpur, Malaysia
20 August 2021
15
#Franklin Templeton Asset Management (Malaysia) Sdn. Bhd. Suite 31-02, 31st Floor, Menara Keck Seng 203, Jalan Bukit Bintang 55100 Kuala Lumpur, Malaysia tel +60 (3) 2264 6688 fax +60 (3) 2145 9071 www.franklintempleton.com.my © 2021 Franklin Templeton. All rights reserved. FTIFMY NSDGQR 06/21
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