Fund Information. Fund Name. Fund Category. Fund Investment Objective. Fund Performance Benchmark. Public China Access Equity Fund

Transcription

1 Fund Information Fund Name (PCASEF) Fund Category Equity Fund Investment Objective To achieve capital growth over the medium to long-term period by investing in a portfolio of investments in the China market and including China-based companies listed on domestic and foreign markets. Fund Performance Benchmark The benchmarks of the Fund and their respective percentages are 90% S&P/CITIC 50 Index and 10% 3-Month Kuala Lumpur Interbank Offered Rate (KLIBOR). The S&P/CITIC 50 Index is a product of S&P Dow Jones Indices LLC, a division of S&P Global, or its affi liates ( SPDJI ), and has been licensed for use by Public Mutual Berhad. Standard & Poor s and S&P are registered trademarks of Standard & Poor s Financial Services LLC, a division of S&P Global ( S&P ); Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC ( Dow Jones ); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Public Mutual Berhad. It is not possible to invest directly in an index. PCASEF is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, any of their respective affiliates (collectively, S&P Dow Jones Indices ). S&P Dow Jones Indices will not make any representation or warranty, express or implied, to the owners of the PCASEF or any member of the public regarding the advisability of investing in securities generally or in PCASEF particularly or the ability of the S&P/ CITIC 50 Index to track general market performance. Past performance of an index is not an indication or guarantee of future results. S&P Dow Jones Indices only relationship to Public Mutual Berhad with respect to the S&P/CITIC 50 Index is the licensing of the Index and certain trademarks, service marks and/or trade names of S&P Dow Jones Indices and/or its licensors. The S&P/CITIC 50 Index is determined, composed and calculated by S&P Dow Jones Indices without regard to Public Mutual Berhad or the PCASEF. S&P Dow Jones Indices has no obligation to take the needs of Public Mutual Berhad or the owners of PCASEF into consideration in determining, composing or calculating the S&P/CITIC 50 Index. S&P Dow Jones Indices is not responsible for and have not participated in the determination of the prices, and amount of PCASEF or the timing of the issuance or sale of PCASEF or in the determination or calculation of the equation by which PCASEF is to be converted into cash, surrendered or redeemed, as the case may be. S&P Dow Jones Indices has no obligation or liability in connection with the administration, marketing or trading of PCASEF. There is no assurance that investment products based on the S&P/CITIC 50 Index will accurately track index performance or provide positive investment returns. S&P Dow Jones Indices LLC is not an investment or tax advisor. A tax advisor should be consulted to evaluate the impact of any tax-exempt securities on portfolios and the tax consequences of making any particular investment decision. Inclusion of a security within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security, nor is it considered to be investment advice. S&P DOW JONES INDICES DOES NOT GUARANTEE THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE S&P/CITIC 50 INDEX OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY PUBLIC MUTUAL BERHAD, OWNERS OF THE PCASEF, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P/CITIC 50 INDEX OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND PUBLIC MUTUAL BERHAD, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.

2 Fund Information Fund Performance Fund Distribution Policy Incidental Breakdown of Unitholdings of PCASEF as at 30 November 2018 Size of holdings No. of % of No. of units unitholders unitholders held (million) 5,000 and below 1, ,001 to 10, ,001 to 50, ,001 to 500, ,001 and above Total 1, Note: Excluding Manager s Stock. Fund Performance Average Total Return for the Following Years Ended 30 November 2018 Average Total Return of PCASEF (%) 1 Year Years Years Annual Total Return for the Financial Years Ended 30 November Year PCASEF (%) 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 ( End of Period FYPrevious Year NAV per unit) (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 - 1 Other Performance Data for the Past Three Financial Years Ended 30 November 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) 166, , ,567 UIC (in 000) 165, , ,137 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 rose to 0.40 time from 0.30 time in the previous financial year on account of higher 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 (5.00) (3.00) (2.00) 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.

3 Fund Performance Statement Of Distribution Of Returns Asset Allocation for the Past Three Financial Years As at 30 November (Percent of NAV) % % % EQUITY SECURITIES Quoted Outside Malaysia China Basic Materials Communications Consumer, Cyclical Consumer, Non-cyclical Energy Financial Industrial Technology Utilities TOTAL QUOTED EQUITY SECURITIES DEPOSITS WITH FINANCIAL INSTITUTIONS OTHER ASSETS & LIABILITIES 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)

4 Overview This Annual Report covers the financial year from 1 December 2017 to 30 November (PCASEF or the Fund) aims to achieve capital growth over the medium to long-term period by investing in a portfolio of investments in the China market and including China-based companies listed on domestic and foreign markets. For the fi nancial year under review, the Fund registered a return of % as compared to its Benchmark s return of %. The Fund s equity portfolio registered a return of % while its money market portfolio registered a return of +3.22% during the financial year under review. A detailed performance attribution analysis is provided in the sections below. For the fi ve financial years ended 30 November 2018, the Fund registered a return of % as compared to the Benchmark s return of % over the same period. Consequently, it is the opinion of the Manager that the Fund has met its objective of achieving capital growth over the said period. Returns from Start of Period 150% 120% 90% 60% 30% 0% -30% Performance of PCASEF from 30 November 2013 to 30 November 2018 PCASEF BENCHMARK The Fund s Benchmark is a composite index of 90% S&P/CITIC 50 Index and 10% 3-Month Kuala Lumpur Interbank Offered Rate (KLIBOR). Income Distribution and Impact on NAV Arising from Distribution The gross distribution of 5.00 sen per unit (tax-exempt) for the financial year ended 30 November 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 30-Nov-18 Before Distribution After Distribution Reinvestment* Reinvestment* Equities & Related Securities 90.3% 86.0% Money Market 9.7% 14.0% * Assumes full reinvestment. Change in Portfolio Exposures from 30-Nov-17 to 30-Nov-18 Average 30-Nov Nov-18 Change Exposure Equities & Related Securities 87.4% 86.0% -1.4% 88.03% Money Market 12.6% 14.0% +1.4% 11.97% Returns Breakdown by Asset Class Returns On Average Attributed Investments Exposure Returns Equities & Related Securities % 88.03% % Money Market 3.22% 11.97% 0.39% less: Expenses -2.18% Total Net Return for the Year % Equity Portfolio Review For the fi nancial year under review, the Fund s equity portfolio registered a return of % as compared to the equity Benchmark s return of %. The Fund commenced the fi nancial year under review with an equity exposure of 87.4%. The Fund s equity exposure was subsequently reduced to 86.0% at the end of the fi nancial year under review to weather the consolidation phase in the China A-shares market. Based on an average equity exposure of 88.03%, the Fund s equity portfolio is deemed to have registered a return of % to the Fund as a whole for the fi nancial year under review. A full review of the performance of the equity market is tabled in the following sections. Sector Allocation In terms of sector allocation within the equity portfolio, the top 5 sectors accounted for 84.7% of the NAV of the Fund and 93.8% of the Fund s equity portfolio. The weightings of the top 5 sectors in China (unless otherwise indicated) are in the following order: Financial (54.3%), Consumer, Non-cyclical (11.5%), Industrial (9.1%), Consumer, Cyclical (7.5%) and Communications (2.3%). Money Market Portfolio Review During the fi nancial year under review, the Fund s money market portfolio yielded a return of +3.22%. During the fi nancial year under review, the Fund s exposure to money market investments increased from 12.6% to 14.0% following the disposal of selected equity investments. Based on an average exposure of 11.97%, the money market portfolio is estimated to have contributed +0.39% to the Fund s overall return for the fi nancial year under review.

5 Stock Market Review Commencing the financial year under review at 3, points, the China A-shares market, as proxied by the S&P/CITIC 50 Index, rose in December 2017 and January 2018 amid positive sentiment post the Central Economic Work Conference as well as the central bank s announcement to ease liquidity conditions in China. The Index subsequently corrected alongside global equity markets in early February 2018 amid concerns over infl ationary pressures and the prospect of faster-than-expected interest rate hikes in the U.S. After a brief rebound, the Index retraced in late March 2018 amid escalating trade tensions between the U.S. and China following President Trump s announcement that the U.S. would impose 25% tariffs on up to US$60 billion of annual imports from China % China s GDP Growth The S&P/CITIC 50 Index traded range-bound in April and May 2018 before declining in June 2018 as fears of a trade war were reignited. In response to the escalation in U.S. trade protectionist measures, the People s Bank of China (PBoC) reduced the reserve requirement ratio (RRR) by 50 basis points (bps) in June 2018 to support liquidity and economic growth. The Index continued to trade sideways from July to November 2018 amid a weaker Renminbi and concerns over slowing economic growth. The S&P/ CITIC 50 Index closed at 2, points to register a decline of 15.69% (-17.87% in Ringgit terms) for the financial year under review F 2019F Source: Bloomberg Led by slower new orders and production levels, China s manufacturing Purchasing Managers Index (PMI) edged down to 51.0 points in the fi rst 11 months of 2018 compared to 51.6 points for the whole of Meanwhile, growth in China s fi xed-asset investment moderated to 5.7% in the fi rst 10 months of 2018 versus the 7.2% growth registered in ,200 3,900 S&P/CITIC 50 Index (30 November November 2018) China s export growth strengthened to 12.6% in the fi rst 10 months of 2018 from 7.9% in 2017 due to higher demand from the U.S. and Japan. Meanwhile, import growth increased to 20.3% from 15.9% over the same period. China s cumulative trade surplus narrowed to US$254 billion in the fi rst 10 months of 2018 from US$335 billion in the corresponding period of the prior year. Index 3,600 3,300 3,000 2,700 2,400 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Money Market Review The Overnight Rate commenced the financial year under review at 2.99% and ended the financial year higher at 3.19%. Economic Review China s GDP growth slowed from 6.9% in 2017 to 6.7% in the first three quarters of 2018 following a moderation in the manufacturing and services sectors. The services sector s growth eased from 8.0% to 7.7% over the same period amid softer growth in financial activities and trade. To support China s economic activities, the PBoC maintained its lending rate at 4.35%. Driven by higher food prices and transportation costs, China s infl ation rate climbed from 1.6% in 2017 to 2.1% in the fi rst 10 months of Residential property prices, as measured by average sales price indices of new homes in 70 large and medium-sized cities, rose at a slower pace of 6.9% in the fi rst 10 months of 2018 compared to an increase of 8.2% in The Chinese government implemented tightening measures in March 2016 to prevent the overheating of property prices in selected cities such as Shanghai and Shenzhen. These tightening measures were extended to other provincial and smaller cities from late August 2016 to June The Chinese Renminbi was included in the International Monetary Fund s Special Drawing Rights (SDR) basket effective 1 October The Chinese Renminbi has depreciated by 2.6% against the Ringgit for the fi nancial year under review. Hong Kong s GDP growth inched lower from 3.8% in 2017 to 3.7% in the fi rst three quarters of 2018 due to slower export growth. The infl ation rate fi rmed from 1.5% in 2017 to 2.4% in the fi rst 10 months of 2018 on the back of higher food prices and housing costs. Hong Kong s government introduced additional tightening measures in June 2018 to curb elevated residential property prices in Hong Kong.

6 Led by higher consumer and investment spending, U.S. GDP growth rose from 2.2% in 2017 to 2.8% in the first three quarters of Investment spending increased from 4.8% to 5.6% over the same period, amid higher non-residential investment. At the Federal Open Market Committee (FOMC) meeting on 7-8 November 2018, the Federal Reserve maintained the Federal funds rate at the target range of 2.00%-2.25%. The FOMC members noted that the ongoing strength of the economy would warrant further hikes in the Federal funds rate on a gradual basis. Eurozone GDP growth eased from 2.5% in 2017 to 2.1% in the first three quarters of 2018 on the back of slower growth in Germany and France. At its monetary policy meeting on 25 October 2018, the European Central Bank (ECB) kept its main refi nancing and deposit rates at 0.00% and -0.40% respectively. The ECB would continue its bond-buying program at the new monthly pace of 15 billion until end-december Following its referendum decision to leave the European Union (EU) in June 2016, the United Kingdom (UK) has commenced a 2-year process of trade negotiations to formally exit the EU by March On 25 November 2018, EU leaders approved the UK s withdrawal agreement and political declaration. However, the deal is awaiting approval from the British Parliament, which will take place in mid-december. Given the above factors, the Fund will continue to rebalance its investment portfolio accordingly with the objective of achieving capital growth over the medium to long-term period by investing in a portfolio of investments in the China market and including China-based companies listed on domestic and foreign markets. 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, PCASEF has not received goods or services by way of soft commissions. Outlook and Investment Strategy Global and regional equity markets experienced volatile trading conditions in the fi rst 11 months of 2018 on concerns over the prospect of higher U.S. interest rates and the U.S. government s trade protectionist measures. While market conditions may remain volatile in the near term, the performance of equity markets over the longer term will depend on the economic outlook and market valuations of the U.S., Europe and the Asia Pacific region. U.S. economic growth is projected to ease from 2.9% in 2018 to 2.6% in 2019 amid softening export growth. However, domestic demand will be supported by resilient consumption and firmer government spending. In the Eurozone, economic growth is envisaged to edge lower from 2.0% in 2018 to 1.6% in 2019 on expectations of slower investment spending. In North Asia, China s GDP growth is estimated to ease from 6.6% in 2018 to 6.2% in 2019, led by slower export growth amid lingering trade tensions. Meanwhile, China s inflation rate is projected to increase from 2.2% in 2018 to 2.4% in Hong Kong s GDP growth is expected to soften from 3.6% in 2018 to 2.7% in 2019 on the back of slower consumer and investment spending. Going forward, the Hong Kong government is anticipated to maintain its tightening stance on the residential property market. However, a shortage of supply to meet underlying demand should lend support to Hong Kong s property market over the long term. Based on closing prices at the end-november 2018, the China A shares market was trading at an estimated P/E ratio of 9.5x as compared to its 10-year average of 11.7x.

7 Statement Of Assets And Liabilities As at 30 November 2018 Statement Of Income And Expenditure MYR 000 MYR 000 Assets Investments 150, ,086 Due from the Manager, net 1,987 - Other receivables 1 1 Deposits with financial institutions 12,076 4,525 Cash at banks 10,436 20, , ,392 Liabilities Due to the Manager, net Due to the Trustee 9 10 Other payables Distribution payable 8,290 4,558 8,412 4,987 Total net assets 166, ,405 Net asset value ( NAV ) attributable to unitholders (Total equity) 166, ,405 Units in circulation (in 000) 165, ,923 NAV per unit, ex-distribution (in MYR) MYR 000 MYR 000 Income Interest income Dividend income 4,033 4,178 Net (loss)/gain from investments (32,359) 35,798 Net realised/unrealised foreign exchange loss (748) (520) (28,886) 39,593 Less: Expenses Trustee s fee Management fee 3,444 3,255 Audit fee Tax agent s fee 3 3 Brokerage fee Administrative fees and expenses ,037 3,745 Net (loss)/income before taxation (32,923) 35,848 Taxation (410) (423) Net (loss)/income after taxation (33,333) 35,425 Net (loss)/income after taxation is made up as follows: Realised 8,627 7,771 Unrealised (41,960) 27,654 (33,333) 35,425 Final distribution for the financial year 8,290 4,558

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 December ,659 87, ,567 Creation of units 2,992-2,992 Cancellation of units (21) - (21) Net income after taxation - 35,425 35,425 Distribution - (4,558) (4,558) As at 30 November , , ,405 As at 1 December , , ,405 Creation of units 15,479-15,479 Net loss after taxation - (33,333) (33,333) Distribution - (8,290) (8,290) As at 30 November ,109 77, , MYR 000 MYR 000 Cash flows from operating activities Proceeds from sale of investments 68,969 56,199 Purchase of investments (79,683) (45,149) Maturity of deposits 962, ,947 Placement of deposits (969,818) (694,841) Interest income received Net dividend income received 3,627 3,761 Trustee s fee paid (116) (106) Management fee paid (3,509) (3,174) Audit fee paid (55) (59) Tax agent s fee paid (3) (3) Payment of other fees and expenses (137) (114) Net cash (outflow)/inflow from operating activities (18,277) 10,593 Cash flows from financing activities Cash proceeds from units created 13,238 2,992 Cash paid on units cancelled - (21) Distribution paid (4,558) (2,982) Net cash inflow/(outflow) from financing activities 8,680 (11) Net (decrease)/increase in cash and cash equivalents (9,597) 10,582 Effect of changes in foreign exchange rates (747) (527) Cash and cash equivalents at the beginning of the financial year 20,780 10,725 Cash and cash equivalents at the end of the financial year 10,436 20,780