Fund Information. Fund Name. Fund Category. Fund Investment Objective. Fund Performance Benchmark. Fund Distribution Policy

Transcription

1 Fund Information Fund Name (PBFI) Fund Category Bond Fund Investment Objective To provide a steady stream of annual income through its investment in private debt securities (bonds) and money market instruments. Fund Performance Benchmark The benchmark of the Fund is an accumulation index based on the 12-Month fi xed deposit rate (FDR) quoted by Malayan Banking Berhad. Fund Distribution Policy Annual Breakdown of Unitholdings of PBFI as at 30 June 2018 Size of holdings No. of % of No. of units unitholders unitholders held (million) 5,000 and below 2, ,001 to 10,000 1, ,001 to 50,000 4, ,001 to 500,000 1, ,001 and above Total 10, Note: Excluding Manager s Stock. Fund Performance Average Total Return for the Following Years Ended 30 June 2018 Average Total Return of PBFI (%) 1 Year Years Years 4.09

2 Fund Performance Fund Performance Annual Total Return for the Financial Years Ended 30 June Year PBFI (%) The calculation of the above returns is based on computation methods of Lipper. Notes: 1. Total return of the Fund is derived by this formulae: End of Period FYCurrent Year NAV per unit End of Period FYPrevious Year NAV per unit - 1 ( ) (Adjusted for unit split and distribution paid out for the period) The above total return of the Fund was sourced from Lipper. 2. Average total return is derived by this formulae: Total Return Number of Years Under Review Other Performance Data for the Past Three Financial Years Ended 30 June Unit Prices (MYR)* Highest NAV per unit for the year Lowest NAV per unit for the year Net Asset Value (NAV) and Units in Circulation (UIC) as at the End of the Year Total NAV (MYR 000) 511, , ,211 UIC (in 000) 493, , ,847 NAV per unit (MYR) Total Return for the Year (%) Capital growth (%) Income (%) Management Expense Ratio (%) Portfolio Turnover Ratio (time) * All prices quoted are ex-distribution. Notes: Management Expense Ratio is calculated by taking the total management expenses expressed as an annual percentage of the Fund s average net asset value. Portfolio Turnover Ratio is calculated by taking the average of the total acquisitions and disposals of the investments in the Fund for the year over the average net asset value of the Fund calculated on a daily basis. The Portfolio Turnover Ratio for the financial year 2018 dropped to 0.41 time from 0.51 time in the previous fi nancial year on account of lower level of rebalancing activities performed by the Fund during the year. Distribution and Unit Split Financial year Date of distribution Distribution per unit Gross (sen) Net (sen) Unit split Impact on NAV Arising from Distribution (Final) for the Financial Years Sen Sen Sen per unit per unit per unit Net asset value before distribution Less: Net distribution per unit (4.00) (4.00) (3.50) Net asset value after distribution Past performance is not necessarily indicative of future performance and unit prices and investment returns may go down, as well as up. Asset Allocation for the Past Three Financial Years As at 30 June (Percent of NAV) % % % FIXED INCOME SECURITIES Quoted Outside Malaysia Indonesia Redeemable Non-convertible Bonds Unquoted Ringgit-denominated Redeemable Non-convertible Bonds Malaysian Government Securities Outside Malaysia Singapore dollar-denominated Redeemable Non-convertible Bonds TOTAL QUOTED AND UNQUOTED FIXED INCOME SECURITIES SHORT TERM CORPORATE BONDS Commercial Papers TOTAL SHORT TERM CORPORATE BONDS

3 Fund Performance Statement Of Distribution Of Returns Asset Allocation for the Past Three Financial Years (cont d) As at 30 June (Percent of NAV) % % % COLLECTIVE INVESTMENT SCHEMES Unquoted Funds TOTAL UNQUOTED COLLECTIVE INVESTMENT SCHEMES Sen Per Unit Gross Distribution Net Distribution Total Returns Effects of Distribution on NAV per unit before and after Distribution: Before After Distribution Distribution NAV per unit (MYR) DEPOSITS WITH FINANCIAL INSTITUTIONS OTHER ASSETS & LIABILITIES

4 Manager s Report Manager s Report Overview This Annual Report covers the financial year from 1 July 2017 to 30 June (PBFI or the Fund) seeks to provide a steady stream of annual income through its investment in private debt securities (bonds) and money market instruments. For the fi nancial year under review, PBFI generated a return of +3.91% as compared to its Benchmark 12-Month fixed deposit rate (12-MFD) quoted by Maybank which yielded a return of +3.20%. For the fi ve financial years ended 30 June 2018, the Fund registered a total return of % and outperformed its Benchmark s return of % over the same period. As the Fund had made distributions for each of its respective financial years, the Manager is of the opinion that the Fund has met its objective to provide a steady stream of annual income over the said period. Returns from Start of Period 25% 20% 15% 10% 5% 0% The Benchmark 12-MFD is computed based on daily returns from 12-MFD quoted by Malayan Banking Berhad. Income Distribution and Impact on NAV Arising from Distribution The gross distribution of 4.00 sen per unit (tax-exempt) for the financial year ended 30 June 2018 had the effect of reducing the Net Asset Value (NAV) of the Fund after distribution. As a result, the NAV per unit of the Fund was reduced to RM from RM after distribution. Effect of Distribution Reinvestment on Portfolio Exposures Performance of PBFI from 30 June 2013 to 30 June 2018 PBFI BENCHMARK -5% Jun-18 Before Distribution After Distribution Reinvestment* Reinvestment* Bonds & Other Fixed Income Securities 92.7% 89.2% Money Market 7.3% 10.8% * Assumes full reinvestment. Change in Portfolio Exposures from 30-Jun-17 to 30-Jun-18 Average 30-Jun Jun-18 Change Exposure Bonds & Other Fixed Income Securities 91.1% 89.2% -1.9% 90.78% Money Market 8.9% 10.8% +1.9% 9.22% Returns Breakdown by Asset Class Market / Returns On Benchmark Benchmark Average Attributed Investments Returns Index Used Exposure Returns Bonds & Other Fixed Income Securities 4.90% 2.83% Bond Index 90.78% 4.45% Money Overnight Market 3.14% 3.06% Rate 9.22% 0.29% less: Expenses -0.83% Total Net Return for the Year 3.91% Bond Index = Quant Shop MGS All Index Overnight Rate = Bank Negara Weighted Average Overnight Interbank Rate Bonds and Other Fixed Income Securities Portfolio Review For the fi nancial year under review, the Fund s bond portfolio which comprises Malaysian Government Securities (MGS) and corporate bonds registered a return of +4.90%. In comparison, the Quant Shop MGS All Index which tracks the performance of all MGS with maturities of 1 year and above, registered a return of +2.83% over the same period. The Fund s bond portfolio outperformed the Quant Shop MGS All Index as MGS yields moved higher relative to corporate bond yields during the fi nancial year under review. During the fi nancial year under review, the Fund s bond exposure decreased from 91.1% to 89.2% due to an increase in the Fund s NAV following infl ows of new funds. Based on an average exposure of 90.78%, the bond portfolio is estimated to have contributed +4.45% to the Fund s overall return for the fi nancial year under review. For a full review of the bond market, please refer to the following sections of this report. Money Market Portfolio Review During the fi nancial year under review, the Fund s money market portfolio, which was invested primarily in deposits, yielded a return of +3.14%. In comparison, the Bank Negara Weighted Average Overnight Interbank Rate (Overnight Rate) registered a return of +3.06% over the same period.

5 Manager s Report Manager s Report During the financial year under review, the Fund s exposure to money market investments increased from 8.9% to 10.8% following the inflows of new funds into the Fund. Based on an average exposure of 9.22%, the money market portfolio is estimated to have contributed +0.29% to the Fund s overall return for the financial year under review. Bond Market and Money Market Review Commencing the financial year under review, the domestic bond market eased amid higher global bond yields following the announcement of the second U.S. interest rate hike in 2017, coupled with growing concerns that the U.S. Federal Reserve may reduce its holdings of government and mortgage bonds. Buying interest returned to the domestic bond market in August 2017 on the back of firmer U.S. Treasuries (UST), a broadly weaker U.S. Dollar as well as accelerating economic growth and lower infl ation in Malaysia. The domestic bond market subsequently retreated in September and October 2017, driven by the Federal Reserve s announcement that it would start its balance sheet reduction program in October 2017, while affirming the likelihood of a 25 basis points (bps) rate hike in December Buying interest gradually returned to the domestic bond market in November and December 2017 on the back of a firmer Ringgit. In January and February 2018, the domestic bond market softened on the back of higher UST yields and weaker Ringgit, coupled with Bank Negara Malaysia increased its Overnight Policy Rate (OPR) by 25 bps to 3.25% on 25 January While the domestic bond market rebounded briefly in March 2018 in tandem with a rally in UST amid concerns over rising trade tensions between the U.S. and China, the market subsequently retreated in April through June 2018, mainly on concerns over higher U.S. interest rates as the 10-year U.S. Treasury yield breached the 3.0% mark and the U.S. Dollar continued to strengthen against the Ringgit. For the fi nancial year under review, the yields of 3-year and 10-year MGS rose by 23 bps and 29 bps respectively to 3.62% and 4.20%. The Overnight Rate commenced the financial year under review at 2.95% and ended the fi nancial year under review higher at 3.18%. In Singapore, the yields of 2-year and 10-year Singapore Government Securities (SGS) rose by 74 bps and 44 bps respectively to 1.96% and 2.53%, tracking the movement of U.S. Treasury yields. Over the financial year under review, the Singapore Dollar appreciated by 1.0% from SGD to SGD against the U.S. Dollar. The Indonesian bond market started the financial year under review on a soft note as buying interest eased following the Indonesian government s proposal to hike its spending and cut its revenue target, which could result in a wider budget deficit for The market subsequently rallied in August through September 2017 after Bank Indonesia cut its benchmark policy rate twice from 4.75% to 4.25% in the third quarter of Fitch Ratings also upgraded Indonesia s sovereign credit rating from BBB- to BBB with a stable outlook on the back of strong economic outlook. However, the market succumbed to selling pressure in February 2018 through June 2018 as UST yields rose and the Rupiah weakened amid the prospect of stronger economic growth outlook and higher infl ation expectations in the U.S. For the fi nancial year under review, the yields of 3-year and 10-year Indonesian government bonds fell by 98 bps and 97 bps respectively to 7.65% and 7.80%. Over the same period, the Rupiah depreciated by 7.0% from Rp13,328 to Rp14,330 against the U.S. Dollar. Economic Review Malaysia s GDP growth eased from 5.9% in 2017 to 5.4% in 1Q 2018 on the back of slower investment spending and export growth. Growth in manufacturing activities moderated from 6.0% in 2017 to 5.3% in 1Q Meanwhile, growth in the services sector rose from 6.2% to 6.5% over the same period. Malaysia s export growth softened to 7.8% in the fi rst four months of 2018 compared to 18.9% for the whole of 2017 due mainly to slower exports of electrical and electronic products. Import growth decelerated to 1.6% from 19.9% over the same period on the back of lower imports of capital and intermediate goods. Malaysia s cumulative trade surplus widened to RM46.4 billion in the fi rst four months of 2018 compared to RM27.5 billion in the corresponding period of the prior year. Due to capital infl ows, Malaysia s foreign reserves increased to US$108.5 billion as at end-may 2018 compared to US$98.0 billion a year ago. Malaysia s infl ation rate slowed to 1.7% in the fi rst fi ve months of 2018 from 3.7% in 2017 amid moderating food prices and transportation costs. On 25 January 2018, Bank Negara Malaysia (BNM) raised the OPR by 25 bps from 3.00% to 3.25% on the back of resilient economic growth. Loans growth climbed to 4.9% in the fi rst fi ve months of 2018 from 4.1% in 2017 due to higher demand from the household sector % Source: Bloomberg Malaysia s Annual GDP Growth F

6 Manager s Report Manager s Report Singapore s GDP growth strengthened from 3.6% in 2017 to 4.4% in 1Q 2018, helped by robust services activities. Singapore s inflation rate edged down to 0.2% in the first five months of 2018 from 0.6% in 2017 amid moderating transportation costs and food prices. Indonesia s economic growth was sustained at 5.1% in 1Q 2018 compared to a similar growth rate in 2017 on the back of resilient domestic demand. The infl ation rate eased to 3.3% in the first five months of 2018 from 3.8% in 2017 due to moderating housing and transportation costs. To stabilise the Rupiah and stem capital outflows, Bank Indonesia (BI) raised its benchmark interest rate by 100 bps to 5.25% in the May-June period. Led by higher investment spending and export growth, U.S. GDP growth rose from 2.3% in 2017 to 2.8% in 1Q Investment spending increased from 3.3% in 2017 to 5.8% in 1Q 2018 due to higher investment in equipment. Likewise, export growth expanded from 3.4% to 4.0% over the same period. At the Federal Open Market Committee (FOMC) meeting on June 2018, the Federal Reserve raised the Federal funds rate target range by 25 bps from 1.50%-1.75% to 1.75%-2.00%. Eurozone GDP growth inched down from 2.6% in 2017 to 2.5% in 1Q 2018 amid a slowdown in consumer spending and export growth. At its monetary policy meeting on 14 June 2018, the European Central Bank (ECB) kept its main refi nancing and deposit rates at 0.00% and -0.40% respectively. The ECB will continue its quantitative-easing program at the monthly pace of 30 billion until the end of September Thereafter, the monthly pace of bond-buying will be reduced to 15 billion until the end of the program in end-december 2018, subject to the medium-term inflation outlook. In a referendum held on 23 June 2016, British voters voted in favour of exiting the European Union (EU). The United Kingdom (UK) formally notifi ed of its exit from the EU under Article 50 on 29 March 2017, which commences a 2-year process of trade negotiations with the EU. The Federal Open Market Committee (FOMC) increased the Federal funds target rate by another 25 bps to 1.75%-2.00% range in June and stated that it will accelerate its balance sheet reduction program from US$30 billion to US$40 billion per month starting July 2018, as scheduled. Looking ahead, global bond yields may trend higher in tandem with the prospect of further rate hikes in the U.S. amid the country s sustained economic growth. However, ongoing domestic activities should help to underpin the domestic bond market. Given the above factors, the Fund will continue to rebalance its portfolio of bond investments accordingly with the objective of providing a steady stream of annual income through its investment in private debt securities (bonds) and money market instruments. Note: Q = Quarter Policy on Soft Commissions The management company may receive goods or services which include research materials, data and quotation services and investment related publications by way of soft commissions provided they are of demonstrable benefit to the Fund and unitholders. During the fi nancial year under review, PBFI has not received goods or services by way of soft commissions. Bond Market Outlook and Investment Strategy U.S. economic growth is projected to edge up from 2.3% in 2017 to 2.9% in 2018, driven by higher investment spending on the back of tax reform measures. In the Eurozone, economic growth is envisaged to ease from 2.6% in 2017 to 2.2% in 2018 amid a moderation in consumer and investment spending. In South-East Asia, Singapore s GDP growth is anticipated to edge down from 3.6% in 2017 to 3.1% in 2018 on expectations of moderating domestic demand. Indonesia s GDP growth is expected to expand from 5.1% in 2017 to 5.3% in 2018 due to robust domestic demand. On the domestic front, Malaysia s GDP growth is estimated to ease from 5.9% in 2017 to 5.5% in 2018 amid moderating export growth. However, domestic demand is projected to be supported by sustained consumer spending.

7 Statement Of Assets And Liabilities As at 30 June 2018 Statement Of Income And Expenditure MYR 000 MYR 000 Assets Investments 481, ,530 Other receivables 14 4 Deposits with financial institutions 50,264 42,042 Cash at banks , ,637 Liabilities Derivative instruments at fair value through profit or loss ( FVTPL ) - 22 Due to the Manager, net 544 1,301 Due to the Trustee Other payables Distribution payable 19,721 19,103 20,305 20,472 Total net assets 511, ,165 Net asset value ( NAV ) attributable to unitholders (Total equity) 511, ,165 Units in circulation (in 000) 493, ,571 NAV per unit, ex-distribution (in MYR) MYR 000 MYR 000 Income Interest income 26,399 24,736 Distribution income Net (loss)/gain from investments (267) 1,256 Amortisation of premium, net of accretion of discount (1,550) (1,530) Net realised/unrealised foreign exchange (loss)/gain (6) ,753 24,921 Less: Expenses Trustee s fee Management fee 4,159 4,099 Audit fee 7 7 Tax agent s fee 3 3 Administrative fees and expenses ,394 4,339 Net income before taxation 20,359 20,582 Taxation (1) (9) Net income after taxation 20,358 20,573 Net income after taxation is made up as follows: Realised 21,819 20,768 Unrealised (1,461) (195) 20,358 20,573 Final distribution for the financial year 19,721 19,103

8 Statement Of Changes In Net Asset Value Statement Of Cash Flows Unitholders Retained capital earnings Total MYR 000 MYR 000 MYR 000 As at 1 July ,000 19, ,211 Creation of units 54,144-54,144 Cancellation of units (52,660) - (52,660) Net income after taxation - 20,573 20,573 Distribution - (19,103) (19,103) As at 30 June ,484 20, ,165 As at 1 July ,484 20, ,165 Creation of units 72,464-72,464 Cancellation of units (56,764) - (56,764) Net income after taxation - 20,358 20,358 Distribution - (19,721) (19,721) As at 30 June ,184 21, , MYR 000 MYR 000 Cash flows from operating activities Proceeds from sale/redemption of investments 226, ,633 Purchase of investments (234,337) (307,683) Maturity of deposits 10,379,263 11,984,735 Placement of deposits (10,387,485) (11,958,631) Interest income received 24,578 22,549 Net distribution income received Trustee s fee paid (196) (191) Management fee paid (4,171) (4,091) Audit fee paid (7) (7) Tax agent s fee paid (3) (6) Payment of other fees and expenses (35) (41) Net cash inflow/(outflow) from operating activities 4,190 (1,719) Cash flows from financing activities Cash proceeds from units created 72,287 54,144 Cash paid on units cancelled (57,332) (52,089) Distribution paid (19,103) (16,655) Net cash outflow from financing activities (4,148) (14,600) Net increase/(decrease) in cash and cash equivalents 42 (16,319) Effect of changes in foreign exchange rates (44) 177 Cash and cash equivalents at the beginning of the financial year 61 16,203 Cash and cash equivalents at the end of the financial year 59 61