Fund Information Fund Name (PBASF) Fund Category Sukuk Fund Investment Objective To provide annual income to investors through investments in sukuk and Islamic money market instruments. Fund Performance Benchmark The benchmark of the Fund is an accumulation index based on the 12-Month General Investment Account (GIA) rate quoted by Bank Negara Malaysia (or any other replacement rate as may be quoted by Bank Negara Malaysia). Fund Distribution Policy Annual Breakdown of Unitholdings of PBASF as at 31 December 2018 Size of holdings No. of % of No. of units unitholders unitholders held (million) 5,000 and below 315 19.75 1 5,001 to 10,000 268 16.80 2 10,001 to 50,000 759 47.59 16 50,001 to 500,000 241 15.11 26 500,001 and above 12 0.75 28 Total 1,595 100.00 73 Note: Excluding Manager s Stock. Fund Performance Average Total Return for the Following Years Ended 31 December 2018 Average Total Return of PBASF (%) 1 Year 6.47 3 Years 6.05 5 Years 5.45
Fund Performance Fund Performance Annual Total Return for the Financial Years Ended 31 December Year 2018 2017 2016 2015 2014 PBASF (%) 6.47 4.71 5.99 4.15 3.85* * The figure shown is for period since Fund commencement (30 September 2013). 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 Other Performance Data for the Past Three Financial Years Ended 31 December 2018 2017 2016 Unit Prices (MYR)* Highest NAV per unit for the year 1.0962 1.0746 1.0843 Lowest NAV per unit for the year 1.0301 1.0260 1.0108 Net Asset Value (NAV) and Units in Circulation (UIC) as at the End of the Year Total NAV (MYR 000) 76,675 59,097 86,887 UIC (in 000) 73,117 57,386 84,659 NAV per unit (MYR) 1.0487 1.0298 1.0263 Total Return for the Year (%) 6.47 4.71 5.99 Capital growth (%) 2.49-0.17 2.74 Income (%) 3.88 4.89 3.16 Management Expense Ratio (%) 0.81 0.82 0.81 Portfolio Turnover Ratio (time) 1.50 1.70 1.59-1 Distribution and Unit Split Financial year 2018 2017 2016 Date of distribution 31.12.18 29.12.17 30.12.16 Distribution per unit Gross (sen) 4.75 4.50 4.50 Net (sen) 4.75 4.50 4.50 Unit split - - - Impact on NAV Arising from Distribution (Final) for the Financial Years 2018 2017 2016 Sen Sen Sen per unit per unit per unit Net asset value before distribution 109.62 107.48 107.13 Less: Net distribution per unit (4.75) (4.50) (4.50) Net asset value after distribution 104.87 102.98 102.63 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 31 December (Percent of NAV) 2018 2017 2016 % % % UNQUOTED SUKUK Ringgit-denominated Sukuk 96.8 83.5 75.3 Government Investment Issues - 8.6 17.9 TOTAL UNQUOTED SUKUK 96.8 92.1 93.2 SHARIAH-BASED PLACEMENTS WITH FINANCIAL INSTITUTIONS 7.9 13.1 11.3 OTHER ASSETS & LIABILITIES -4.7-5.2-4.5 * 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 1.50 times from 1.70 times in the previous fi nancial year on account of lower level of rebalancing activities performed by the Fund during the year.
Statement Of Distribution Of Returns Sen Per Unit Gross Distribution 4.7500 Net Distribution 4.7500 Total Returns 6.6400 Effects of Distribution on NAV per unit before and after Distribution: Before After Distribution Distribution NAV per unit (MYR) 1.0962 1.0487 Overview This Annual Report covers the fi nancial year from 1 January 2018 to 31 December 2018. (PBASF or the Fund) seeks to provide annual income to investors through investments in sukuk and Islamic money market instruments. The Fund will invest 75% to 98% of its Net Asset Value (NAV) in sukuk while the balance of the Fund s NAV will be invested in Islamic money market instruments and Islamic deposits. For the fi nancial year under review, the Fund registered a return of +6.47% as compared to its Benchmark 12-Month General Investment Account (GIA) rate which yielded a return of +3.53%. For the fi ve fi nancial years ended 31 December 2018, the Fund registered a total return of +27.27% and outperformed its Benchmark s return of +17.25% over the same period. As the Fund has made distributions for each of its respective fi nancial years, the Manager is of the opinion that the Fund has met its objective to provide annual income over the said period. Performance of PBASF from 31 December 2013 to 31 December 2018 30% 25% PBASF BENCHMARK Returns from Start of Period 20% 15% 10% 5% 0% -5% 2013 2014 2015 2016 2017 2018 The Benchmark 12-Month GIA rate is computed from the average 12-Month investment account rate compiled by Bank Negara Malaysia (BNM). Income Distribution and Impact on NAV Arising from Distribution The gross distribution of 4.75 sen per unit (tax-exempt) for the fi nancial year ended 31 December 2018 had the effect of reducing the NAV of the Fund after distribution. As a result, the NAV per unit of the Fund was reduced to RM1.0487 from RM1.0962 after distribution. Effect of Distribution Reinvestment on Portfolio Exposures 31-Dec-18 Before Distribution After Distribution Reinvestment* Reinvestment* Sukuk 96.8% 92.6% Islamic Money Market 3.2% 7.4% * Assumes full reinvestment.
Change in Portfolio Exposures from 31-Dec-17 to 31-Dec-18 Average 31-Dec-17 31-Dec-18 Change Exposure Sukuk 88.3% 92.6% +4.3% 89.10% Islamic Money Market 11.7% 7.4% -4.3% 10.90% Returns Breakdown by Asset Class Market / Returns On Benchmark Benchmark Average Attributed Investments Returns Index Used Exposure Returns Sukuk 7.80% 4.34% Bond Index 89.10% 6.95% Islamic Money Overnight Market 3.24% 3.21% Islamic Rate 10.90% 0.35% less: Expenses -0.83% Total Net Return for the Year 6.47% Bond Index = Quant Shop GII All Index Overnight Islamic Rate = Overnight Islamic Interbank Money Market Rate Sukuk Portfolio Review For the fi nancial year under review, the Fund s sukuk portfolio which comprises of Government Investment Issues (GII) and corporate sukuk registered a return of +7.80%. In comparison, the Quant Shop GII All Index which tracks the performance of all GII with maturities of 1 year and above, registered a return of +4.34% over the same period. The outperformance of the Fund s sukuk portfolio was attributable to the firm prices of corporate sukuk amid resilient domestic economic conditions during the financial year under review. During the fi nancial year under review, the Fund s sukuk exposure increased from 88.3% to 92.6% as the Fund continued to capitalise on investment opportunities in the sukuk market. Based on an average exposure of 89.10%, the sukuk portfolio is estimated to have contributed +6.95% to the Fund s overall return for the financial year under review. For a full review of the sukuk market, please refer to the following sections of this report. Islamic Money Market Portfolio Review During the financial year under review, the Fund s Islamic money market portfolio, which was invested primarily in Islamic deposits, yielded a return of +3.24%. In comparison, the Overnight Islamic Interbank Money Market Rate (Overnight Islamic Rate) registered a return of +3.21% over the same period. During the fi nancial year under review, the Fund s exposure to Islamic money market investments decreased from 11.7% to 7.4% as funds were mobilised into sukuk investments. Based on an average exposure of 10.90%, the Islamic money market portfolio is estimated to have contributed +0.35% to the Fund s overall return for the fi nancial year under review. Sukuk Market and Islamic Money Market Review In January and February 2018, the domestic sukuk market softened on the back of higher U.S. Treasury (UST) yields and a weaker Ringgit, coupled with BNM s move to increase its Overnight Policy Rate (OPR) by 25 basis points (bps) to 3.25% on 25 January 2018. While the domestic sukuk market rebounded briefly in March 2018 in tandem with a rally in UST amid worries over rising trade tensions between the U.S. and China, the market subsequently retreated in April through June 2018. This was mainly on concerns over higher U.S. interest rates as the 10-year UST yield breached the 3.0% mark and the U.S. Dollar continued to strengthen against the Ringgit. The domestic sukuk market regained strength in July and August 2018 in tandem with most regional bond markets as selected major central banks showed signs of slowing down on monetary normalisation. In September and October 2018, the domestic sukuk market saw subdued trading activities as sentiments remained cautious ahead of Budget 2019 and against the backdrop of a weaker Ringgit and higher UST yield. The soft sentiment continued into November weighed by the declining crude oil price. Towards the end of 2018, the domestic sukuk market closed fi rmer albeit thin liquidity, riding on the Ringgit s strength and rally in the UST as the U.S. Federal Reserve trimmed the number of potential rate hikes in 2019 to two from three, pointing to weakness in fi nancial markets and a moderating growth outlook. For the fi nancial year under review, domestic sukuk yields have increased with the yields of 3-year and 10-year GII rising by 25 bps and 5 bps respectively to 3.68% and 4.24%. The Overnight Islamic Rate commenced the fi nancial year under review at 2.99% and ended the fi nancial year higher at 3.23%. Economic Review Malaysia s GDP growth eased from 5.9% in 2017 to 4.7% in the fi rst three quarters of 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 the fi rst three quarters of 2018. Meanwhile, growth in the services sector rose from 6.2% to 6.8% over the same period. Malaysia s export growth softened to 7.5% in the fi rst 10 months of 2018 from 18.8% in 2017 amid slower exports of electronic and non-electrical products. Import growth decelerated to 5.4% 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 RM102.0 billion in the fi rst 10 months of 2018 compared to RM81.2 billion in the corresponding period of the prior year. Led by a sustained trade surplus, Malaysia s foreign reserves increased to US$102.0 billion as at end-november 2018 compared to US$101.9 billion a year ago.
Malaysia s inflation rate slowed to 1.0% in the first 11 months of 2018 from 3.7% in 2017 amid moderating food prices and transportation costs. BNM maintained the OPR at 3.25% to support economic activities. Loans growth climbed to 6.2% in the first 11 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. 7.0 6.0 5.0 4.0 % 3.0 2.0 1.0 0.0 4.7 Malaysia s Annual GDP Growth 6.0 5.1 4.2 2013 2014 2015 2016 2017 2018F 2019F Source: Bloomberg 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 2018. 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 held on 18-19 December 2018, the Federal Reserve raised the Federal funds rate target range by 25 bps from 2.00%-2.25% to 2.25%-2.50%. Eurozone GDP growth eased from 2.5% in 2017 to 2.1% in the first three quarters of 2018 following slower consumer spending and export growth. At its monetary policy meeting held on 13 December 2018, the European Central Bank (ECB) kept its main refinancing and deposit rates at 0.00% and -0.40% respectively. 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. Sukuk Market Outlook and Investment Strategy 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. The Federal Reserve has projected two hikes for 2019 in its December 2018 FOMC meeting amid a slower projected GDP growth. 5.9 4.7 4.6 In the Eurozone, economic growth is envisaged to edge lower from 1.9% in 2018 to 1.6% in 2019 on expectations of slower investment spending. On the domestic front, Malaysia s GDP growth is estimated to inch lower from 4.7% in 2018 to 4.6% in 2019 on the back of moderating export growth. However, domestic demand is projected to be supported by resilient consumer spending. Based on MOF s projections in its Economic Outlook 2019 report, the government s budget defi cit is envisaged to narrow to 3.4% of GDP (RM52.1 billion) in 2019 from the 3.7% of GDP (RM53.3 billion) estimated in 2018. Total revenue is projected to expand by 10.7% to RM261.8 billion in 2019, partly underpinned by a special dividend of RM30 billion from Petroliam Nasional Berhad (Petronas). Markets continue to be beholden to the U.S. Federal Reserve s statements and actions as seen in the past months. As widely anticipated, the Federal Reserve raised the federal funds rate by 25 bps to the target range of 2.25% to 2.50% in December 2018. The latest rate hike marks the fourth increase in 2018 and the ninth since normalising rates began in December 2015. Going into 2019, offi cials are projecting two rate hikes reduced from three hikes guided earlier. The 10-year UST yield retraced from its high of 3.24% recorded in early November 2018 to 2.68% in end-december 2018. Investors will continue to monitor and assess the outlook for the U.S. economy and interest rate, and the potential impact of U.S. trade protectionist measures to global trade. On the domestic front, BNM has kept the OPR unchanged at 3.25% since its 25 bps hike in January 2018, amid moderating economic growth outlook and a benign infl ation environment. Budget 2019 shows that the government will focus on more prudent spending and in fi ne-tuning its tax measures. Investors and rating agencies will continue to watch and assess the government s effort to restore public fi nances and better manage its debt to raise confidence in the national fi scal management over the medium term. Given the above factors, the Fund will continue to rebalance its portfolio of sukuk investments accordingly with the objective of providing annual income to investors through investments in sukuk and Islamic 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, PBASF has not received goods or services by way of soft commissions.
Statement Of Assets And Liabilities As at 31 December 2018 Statement Of Income And Expenditure 2018 2017 MYR 000 MYR 000 Assets Investments 74,219 54,444 Other receivables 1 2 Shariah-based placements with fi nancial institutions 6,080 7,720 Cash at bank 50 50 80,350 62,216 Liabilities Due to the Manager, net 186 513 Due to the Trustee 2 2 Other payables 14 22 Distribution payable 3,473 2,582 3,675 3,119 Total net assets 76,675 59,097 Net asset value ( NAV ) attributable to unitholders (Total equity) 76,675 59,097 Units in circulation (in 000) 73,117 57,386 NAV per unit, ex-distribution (in MYR) 1.0487 1.0298 2018 2017 MYR 000 MYR 000 Income Profi t from Shariah-based placements 258 249 Income from sukuk 3,320 3,280 Net gain from investments 1,720 654 Amortisation of premium, net of accretion of discount (76) (86) 5,222 4,097 Less: Expenses Trustee s fee 26 27 Management fee 557 588 Audit fee 7 7 Tax agent s fee 3 3 Administrative fees and expenses 10 16 Payment to charitable bodies - 8 603 649 Net income before taxation 4,619 3,448 Taxation - - Net income after taxation 4,619 3,448 Net income after taxation is made up as follows: Realised 3,680 3,162 Unrealised 939 286 4,619 3,448 Final distribution for the financial year 3,473 2,582
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 January 2017 85,863 1,024 86,887 Creation of units 3,916-3,916 Cancellation of units (32,572) - (32,572) Net income after taxation - 3,448 3,448 Distribution - (2,582) (2,582) As at 31 December 2017 57,207 1,890 59,097 As at 1 January 2018 57,207 1,890 59,097 Creation of units 32,361-32,361 Cancellation of units (15,929) - (15,929) Net income after taxation - 4,619 4,619 Distribution - (3,473) (3,473) As at 31 December 2018 73,639 3,036 76,675 2018 2017 MYR 000 MYR 000 Cash flows from operating activities Proceeds from sale of investments 99,952 139,462 Purchase of investments (117,262) (111,778) Maturity of Shariah-based placements 1,958,899 1,981,444 Shariah-based placements (1,957,259) (1,979,293) Profi t from Shariah-based placements received 259 251 Income from sukuk received 2,499 2,669 Trustee s fee paid (26) (28) Management fee paid (548) (607) Audit fee paid (7) (7) Tax agent s fee paid (3) (3) Payment of other fees and expenses (18) (11) Payment to charitable bodies - (8) Net cash (outflow)/inflow from operating activities (13,514) 32,091 Cash flows from financing activities Cash proceeds from units created 32,361 3,920 Cash paid on units cancelled (16,265) (32,201) Distribution paid (2,582) (3,810) Net cash inflow/(outflow) from financing activities 13,514 (32,091) Cash and cash equivalents at the beginning of the financial year 50 50 Cash and cash equivalents at the end of the financial year 50 50