Fund Information Fund Name (PeFAF) Fund Category Mixed Asset Fund Investment Objective To achieve capital growth over the medium to long-term period through a portfolio allocation across equities and fixed income securities. Fund Performance Benchmark The benchmarks of the Fund and their respective percentages are 70% FTSE Bursa Malaysia KLCI (FBM KLCI) and 30% 3-Month Kuala Lumpur Interbank Offered Rate (KLIBOR). The PeFAF is not in any way sponsored, endorsed, sold or promoted by FTSE International Limited ( FTSE ) or by Bursa Malaysia Berhad ( BURSA MALAYSIA ) or by the London Stock Exchange Group companies (the LSEG ) and neither FTSE nor BURSA MALAYSIA nor LSEG makes any warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the FTSE BURSA MALAYSIA KLCI ( the Index ), and/or the figure at which the said Index stands at any particular time on any particular day or otherwise. The Index is compiled and calculated by FTSE. However, neither FTSE nor BURSA MALAYSIA nor LSEG shall be liable (whether in negligence or otherwise) to any person for any error in the Index and neither FTSE nor BURSA MALAYSIA nor LSEG shall be under any obligation to advise any person of any error therein. FTSE, FT-SE and Footsie are trade marks of LSEG and are used by FTSE under licence. BURSA MALAYSIA is a trade mark of BURSA MALAYSIA. Fund Distribution Policy Incidental Breakdown of Unitholdings of PeFAF as at 30 September 2018 Size of holdings No. of unitholders % of unitholders No. of units held (million) 5,000 and below 2,785 53.58 5 5,001 to 10,000 758 14.58 6 10,001 to 50,000 1,194 22.97 28 50,001 to 500,000 441 8.48 57 500,001 and above 20 0.39 24 Total 5,198 100.00 120 Note: Excluding Manager s Stock. Fund Performance Average Total Return for the Following Year Ended 30 September 2018 Average Total Return of PeFAF (%) 1 Year 6.33
Fund Performance Fund Performance Annual Total Return for the Financial Period Ended 30 September Year 2018 PeFAF (%) 6.84* * The figure shown is for period since Fund commencement (3 August 2017). 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 - 1 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 Other Performance Data for the Financial Period from 14 July 2017 to 30 September 2018 2018 Unit Prices (MYR) Highest NAV per unit for the period 0.2671 Lowest NAV per unit for the period 0.2498 Net Asset Value (NAV) and Units in Circulation (UIC) as at the End of the Period Total NAV () 32,125 UIC (in 000) 120,277 NAV per unit (MYR) 0.2671 Total Return for the Period (%) 6.84 Capital growth (%) 5.81 Income (%) 0.97 Management Expense Ratio (%) 1.86 Portfolio Turnover Ratio (time) 0.41 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 period over the average net asset value of the Fund calculated on a daily basis. Distribution and Unit Split No distribution and unit split were declared for the financial period from 14 July 2017 to 30 September 2018. Past performance is not necessarily indicative of future performance and unit prices and investment returns may go down, as well as up. Asset Allocation As at 30 September (Percent of NAV) 2018 % EQUITY SECURITIES Quoted Malaysia Communications 2.7 Consumer, Cyclical 2.8 Consumer, Non-cyclical 20.7 Financial 11.4 Industrial 14.8 Technology 3.4 55.8 Outside Malaysia Korea Industrial 1.4 TOTAL QUOTED EQUITY SECURITIES 57.2 COLLECTIVE INVESTMENT FUNDS Quoted Outside Malaysia Korea Funds 0.5 TOTAL QUOTED COLLECTIVE INVESTMENT FUNDS 0.5 COLLECTIVE INVESTMENT SCHEMES Unquoted Funds 2.9 TOTAL UNQUOTED COLLECTIVE INVESTMENT SCHEMES 2.9 DEPOSITS WITH FINANCIAL INSTITUTIONS 41.1 OTHER ASSETS & LIABILITIES -1.7
Manager s Report Manager s Report Overview For the purpose of this first Annual Report, the financial period under review covers the period from its commencement on 3 August 2017 (being the last day of the initial offer period) to 30 September 2018. (PeFAF or the Fund) seeks to achieve capital growth over the medium to long-term period through a portfolio allocation across equities and fixed income securities. For the financial period under review, the Fund registered a return of +6.84% as compared to its Benchmark s return of +2.18%. The Fund s equity portfolio registered a return of +14.53% while its money market portfolio registered a return of +3.69% during the financial period under review. A detailed performance attribution analysis is provided in the sections below. As the Fund has generated a positive return during the financial period under review, the Manager is of the opinion that the Fund is positioned to meet its objective of achieving capital growth over the medium to long-term period. Returns from Start of Period 8% 6% 4% 2% 0% -2% -4% Performance of PeFAF from 3 August 2017 (Commencement Date) to 30 September 2018 PeFAF BENCHMARK Aug-17 Oct-17 Jan-18 Apr-18 Jul-18 Sep-18 The Fund s Benchmark is a composite index of 70% FTSE Bursa Malaysia KLCI (FBM KLCI) and 30% 3-Month Kuala Lumpur Interbank Offered Rate (KLIBOR). Effect of Distribution Reinvestment on Portfolio Exposures There were no distributions declared for the period ended 30 September 2018. Change in Portfolio Exposures from 3-Aug-17 to 30-Sep-18 3-Aug-17 (Commencement Date) 30-Sep-18 Change Average Exposure Equities & Related Securities 0.0% 60.6% +60.6% 51.65% Money Market 100.0% 39.4% -60.6% 48.35% Returns Breakdown by Asset Class Returns On Investments Market / Benchmark Benchmark Returns Index Used Average Attributed Exposure Returns Equities & Related Securities 14.53% 1.20% FBM KLCI 51.65% 7.50% Money Market 3.69% 3.58% Overnight Rate 48.35% 1.79% less: Expenses -2.45% Total Net Return for the Period 6.84% FBM KLCI = FTSE Bursa Malaysia Kuala Lumpur Composite Index Overnight Rate = Bank Negara Weighted Average Overnight Interbank Rate Equity Portfolio Review For the financial period under review, the Fund s equity portfolio registered a return of +14.53% as compared to equity Benchmark s return of +1.20%. The Fund s equity portfolio outperformed the equity Benchmark as its selected holdings within the Industrial and Consumer sectors outperformed the broader market during the financial period under review. Following its commencement, the Fund s equity exposure was progressively increased to 60.6% at the end of the financial period under review to capitalise on investment opportunities in the domestic and regional markets. Based on an average equity exposure of 51.65%, the Fund s equity portfolio is deemed to have registered a return of +7.50% to the Fund as a whole for the financial period under review. A full review of the performance of the equity markets is tabled in the following sections. Sector Allocation In terms of sector allocation within the equity portfolio, the top 5 sectors accounted for 53.1% of the Net Asset Value (NAV) of the Fund and 87.6% of the Fund s equity portfolio. The weightings of the top 5 sectors in Malaysia (unless otherwise indicated) are in the following order: Consumer, Noncyclical (20.7%), Industrial (14.8%), Financial (11.4%), Technology (3.4%) and Consumer, Cyclical (2.8%). Money Market Portfolio Review During the financial period under review, the Fund s money market portfolio, which was invested primarily in deposits, yielded a return of +3.69%. In comparison, the Bank Negara Weighted Average Overnight Interbank Rate (Overnight Rate) registered a return of +3.58% over the same period. Following its commencement, the Fund s exposure to money market investments was progressively reduced to 39.4% as funds were mobilised into equity investments. Based on an average exposure of 48.35%, the money market portfolio is estimated to have contributed +1.79% to the Fund s overall return for the financial period under review.
Manager s Report Manager s Report Stock Market Review Starting the financial period under review at 1,771.90 points, the FBM KLCI traded in a tight range in August and September 2017 due to a lack of fresh leads. The Index retraced in October and November 2017 as market sentiment was dampened by a selldown in selected blue chips before subsequently rebounding in December 2017 and January 2018 on the back of firmer oil prices and buying interest from foreign investors. In early February 2018, the Index fell in tandem with global markets on concerns over the prospect of higher-than-expected interest rates in the U.S. The FBM KLCI subsequently rebounded to an all-time closing high of 1,895.18 points on 19 April 2018 amid net foreign inflows before easing in early May 2018 ahead of Malaysia s 14th General Election. Post-election, the local market moved in a trading range before trending lower from late May to June 2018, weighed by foreign selling amid the outflow of funds from the emerging markets. After posting a rebound in July and August 2018 on renewed buying interest, the Index consolidated in September 2018 in tandem with lacklustre regional markets amid lingering U.S.-China trade tensions and softening regional currencies. The FBM KLCI closed at 1,793.15 points to register a gain of 1.20% for the financial period under review. 1,950 FTSE Bursa Malaysia KLCI (3 August 2017-30 September 2018) Money Market Review The Overnight Rate commenced the financial period under review at 3.00% and ended the financial period under review higher at 3.24%. Economic Review Malaysia s GDP growth eased from 5.9% in 2017 to 4.9% in 1H 2018 on the back of slower investment spending and export growth. Growth in manufacturing activities moderated from 6.0% in 2017 to 5.1% in 1H 2018. Meanwhile, growth in the services sector rose from 6.2% to 6.5% over the same period. 7.0 6.0 5.0 4.0 % 3.0 2.0 1.0 4.7 Malaysia s Annual GDP Growth 6.0 5.1 4.2 5.9 5.1 5.0 1,900 0.0 2013 2014 2015 2016 2017 2018F 2019F Index 1,850 1,800 1,750 1,700 1,650 Aug-17 Oct-17 Dec-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 The regional equity markets, as proxied by the Morgan Stanley Capital International All Country Far-East Ex-Japan (MSCI FExJ) Index, commenced the financial period under review at 614.73 points. The Index moved higher for the remainder of 2017, driven by improving liquidity conditions in China, a rosier economic outlook, robust corporate earnings as well as the strengthening of regional currencies against the U.S. Dollar. The MSCI FExJ Index started 2018 on a strong note but subsequently retraced from February to September 2018, weighed by concerns over the prospect of faster-than-expected interest rate hikes in the U.S. as well as trade tensions between the U.S. and China. The MSCI FExJ Index closed at 619.71 points to register a gain of 0.81% (-2.55% in Ringgit terms) for the financial period under review. The South Korea market registered a return of -3.43% (in Ringgit terms) for the financial period under review. Source: Bloomberg Malaysia s export growth softened to 7.3% in the first seven months of 2018 compared to 18.8% for the whole of 2017 amid slower exports of electrical and electronic products. Import growth decelerated to 4.8% from 19.7% over the same period on the back of lower imports of capital and intermediate goods. Malaysia s cumulative trade surplus widened to RM68.8 billion in the first seven months of 2018 compared to RM53.1 billion in the corresponding period of the prior year. Led by capital inflows and sustained trade surplus, Malaysia s foreign reserves increased to US$104.4 billion as at end-august 2018 compared to US$100.5 billion a year ago. Malaysia s inflation rate slowed to 1.3% in the first eight months of 2018 from 3.7% in 2017 amid moderating food prices and transportation costs. Bank Negara Malaysia (BNM) maintained the Overnight Policy Rate (OPR) at 3.25% to support economic activities. Loans growth climbed to 5.4% in the first eight months of 2018 from 4.1% in 2017 due to higher demand from the household sector. The Ministry of Finance (MOF) announced a new Sales and Services Tax (SST) effective 1 September 2018. The sales tax is set at two rates of 5% and 10% for selected manufactured and imported products while the services tax is fixed at 6% for selected services. The MOF projects the SST to bring in revenues amounting to RM4.0 billion for 4Q 2018. Weighed by slower investment spending, South Korea s GDP growth eased from 3.1% in 2017 to 2.8% in 1H 2018.
Manager s Report Manager s Report Led by firmer investment spending and export growth, U.S. GDP growth rose from 2.2% in 2017 to 2.7% in 1H 2018. Investment spending increased from 4.8% to 5.3% over the same period amid higher non-residential investment. At the Federal Open Market Committee (FOMC) meeting on 25-26 September 2018, the Federal Reserve raised the Federal funds rate target range by 25 basis points (bps) to 2.00%-2.25% from 1.75%-2.00%. 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 inched down from 2.5% in 2017 to 2.3% in 1H 2018 amid slower consumer spending and export growth. At its monetary policy meeting on 13 September 2018, the European Central Bank (ECB) kept its main refinancing and deposit rates at 0.00% and -0.40% respectively. Effective end-september 2018, the ECB has halved its monthly pace of bond-buying to 15 billion until the end of December 2018. 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 2019. 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 through a portfolio allocation across equities and fixed income securities. Notes: Q = Quarter H = Half 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 financial period under review, PeFAF has received data and quotation services by way of soft commissions. These services were used to provide financial data on securities and price quotation information to the Fund Manager during the financial period under review. Outlook and Investment Strategy Global and regional equity markets experienced volatile trading conditions in 1H 2018 on concerns over the prospect of higher U.S. interest rates and the U.S. government s proposed trade protectionist measures. After firming in July as foreign selling subsided, regional equity markets traded mixed in August and September due to escalating trade tensions. While the weakness of emerging market currencies as well as U.S.-China trade tensions may result in volatile market conditions 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 2.5% in 2019 amid softening export growth. However, domestic demand will be supported by resilient consumption and firmer investment spending. In the Eurozone, economic growth is envisaged to edge lower from 2.1% in 2018 to 1.8% in 2019 on expectations of a moderation in investment spending. In North Asia, South Korea s GDP growth is projected to inch down from 2.8% in 2018 to 2.7% in 2019 as consumer and government spending eases. On the domestic front, Malaysia s GDP growth is estimated to inch lower from 5.1% in 2018 to 5.0% in 2019 on the back of moderating export growth. However, domestic demand is projected to be supported by resilient consumer spending. As at end-september 2018, the local stock market was trading at a prospective P/E ratio of 17.3x, which was above its 10-year average of 16.5x. The market s dividend yield was 3.21%. Valuations of regional markets in North-East and South-East Asia were generally mixed relative to their historical averages following their respective performances over the same period.
Statement Of Assets And Liabilities As at 30 September 2018 Statement Of Income And Expenditure Assets Investments 19,469 Due from brokers/financial institutions, net 2 Other receivables 28 Deposits with financial institutions 13,206 Cash at banks 66 32,771 Liabilities Due to brokers/financial institutions, net 170 Due to the Manager, net 460 Due to the Trustee 3 Other payables 13 646 Total net assets 32,125 Net asset value ( NAV ) attributable to unitholders (Total equity) 32,125 Units in circulation (in 000) 120,277 NAV per unit (in sen) 26.71 Income Interest income 587 Distribution income 1 Dividend income 394 Net gain from investments 1,713 Net realised/unrealised foreign exchange loss (2) 2,693 Less: Expenses Trustee s fee 23 Management fee 621 Audit fee 7 Tax agent s fee 3 Brokerage fee 79 Administrative fees and expenses 11 744 Net income before taxation 1,949 Taxation (1) Net income after taxation 1,948 Net income after taxation is made up as follows: Realised (844) Unrealised 2,792 1,948
Statement Of Changes In Net Asset Value Statement Of Cash Flows Unitholders capital Retained earnings Total As at 14 July 2017 - - - Creation of units 34,102-34,102 Cancellation of units (3,925) - (3,925) Net income after taxation - 1,948 1,948 As at 30 September 2018 30,177 1,948 32,125 Cash flows from operating activities Proceeds from sale of investments 2,758 Purchase of investments (20,451) Capital repayment received 28 Maturity of deposits 4,492,950 Placement of deposits (4,506,156) Interest income received 583 Net distribution income received 1 Net dividend income received 369 Trustee s fee paid (20) Management fee paid (576) Audit fee paid (3) Payment of other fees and expenses (5) Net cash outflow from operating activities (30,522) Cash flows from financing activities Cash proceeds from units created 34,042 Cash paid on units cancelled (3,450) Net cash inflow from financing activities 30,592 Net increase in cash and cash equivalents 70 Effect of changes in foreign exchange rates (4) Cash and cash equivalents at the end of the financial period 66