Fund Information Fund Name (PBAREIF) Fund Category Balanced Fund Investment Objective Seeks to achieve capital growth and income over the medium to long term period by investing in companies that are principally engaged in property investment and development, hotel and resorts development and investment, real estate investment trusts (REITs), companies which have significant property or real estate assets and fixed income securities in domestic and regional markets. Fund Performance Benchmark The benchmark of the Fund and their respective percentages are 60% based on the constituents within the real estate sector of the Standard & Poor s BMI Asia Pacific Index customised by S&P Dow Jones Indices LLC, to the following weights i.e. 20% Japan, 20% Australia, 20% Malaysia and the balance of the 40% for the rest of the countries within the index universe currently including China H Shares, Hong Kong, Indonesia, New Zealand, Philippines, Singapore, Taiwan, Korea and Thailand. The real estate sector is as defined by the then-current Global Industry Classification Standard (GICS) and 40% 3-Month Kuala Lumpur Interbank Offered Rate (KLIBOR). The customised benchmark index for PBAREIF is a product of S&P Dow Jones Indices LLC ( 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 ( S&P ); Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC ( Dow Jones ); Standard & Poor s, S&P and Dow Jones are trademarks of the SPDJI; and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Public Mutual Berhad. Public Mutual Berhad s PBAREIF is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P BMI Asia Pacific Index. Fund Distribution Policy Annual Foreign Exchange Rate With effect from 5 January 2017, all foreign securities and assets are converted into Malaysian Ringgit ( MYR ) based on the bid exchange rate quoted by Thomson Reuters at United Kingdom time 4:00 p.m. the same day. Revision of Transfer Charges and Switching Fees with effect from 1 January 2018 With effect from 1 January 2018, transfer charges and switching fees for switching transactions made after 90 days will be revised as follows: i) Administration fee of up to RM50 will be charged for each transfer transaction. ii) Switching fee of up to RM50 will be imposed for switching transactions out of the fund.
Fund Information Fund Performance Breakdown of Unitholdings of PBAREIF as at 30 April 2017 Size of holdings No. of unitholders % of unitholders No. of units held (million) 5,000 and below 482 7.37 2 5,001 to 10,000 569 8.70 4 10,001 to 50,000 2,896 44.27 81 50,001 to 500,000 2,537 38.79 329 500,001 and above 57 0.87 42 Total 6,541 100.00 458 Note: Excluding Manager s Stock. Fund Performance Average Total Return for the Following Years Ended 30 April 2017 Average Total Return of PBAREIF (%) 1 Year 10.66 3 Years 7.00 5 Years 7.54 Annual Total Return for the Financial Years Ended 31 October Year 2016 2015 2014 2013 2012 PBAREIF (%) 4.99 7.69 1.42 8.16 21.03 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 Past performance is not necessarily indicative of future performance and unit prices and investment returns may go down, as well as up. Other Performance Data for the Past Three Financial Periods Ended 30 April 2017 2016 2015 Unit Prices (MYR) Highest NAV per unit for the period 0.3395 0.3148 0.3189 Lowest NAV per unit for the period 0.3181 0.2972 0.2903 Net Asset Value (NAV) and Units in Circulation (UIC) as at the End of the Period Total NAV (MYR 000) 153,257 188,085 250,987 UIC (in 000) 457,607 607,369 800,144 NAV per unit (MYR) 0.3349 0.3097 0.3137 Total Return for the Period (%) 4.32-1.02 6.27 Capital growth (%) 3.55-1.75 5.69 Income (%) 0.74 0.74 0.55 Management Expense Ratio (%) 1.80 1.80 1.79 Portfolio Turnover Ratio (time) 0.13 0.13 0.21 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. Asset Allocation for the Past Three Financial Periods As at 30 April (Per Cent of Net Asset Value) 2017 2016 2015 % % % EQUITY SECURITIES Quoted Malaysia Real Estate 2.9 1.6 2.9 Agriculture - 0.1 - Agriculture / Real Estate - - 2.8 Holding Companies - Diversified / Real Estate - - 1.4 2.9 1.7 7.1 Outside Malaysia Australia Engineering & Construction / Real Estate 1.5 - - Hong Kong Real Estate 9.5 9.8 7.0 Commercial Services / Real Estate 1.4 1.0 - Holding Companies - Diversified / Real Estate 1.1 - - Investment Companies / Real Estate 1.1 1.5 3.4 Lodging 0.5 1.9-13.6 14.2 10.4
Fund Performance Fund Performance Asset Allocation for the Past Three Financial Periods (cont d) As at 30 April (Per Cent of Net Asset Value) 2017 2016 2015 % % % Indonesia Real Estate 1.1 3.1 5.5 Japan Real Estate 7.6 3.4 3.2 Home Builders 1.7 - - Transportation 1.1 1.0 - Entertainment / Lodging (Resorts) - 1.4 1.7 10.4 5.8 4.9 Philippines Real Estate 1.9 2.9 1.4 Singapore Real Estate 2.2 0.7 1.8 Thailand Real Estate 0.1-0.6 Home Builders - - 2.5 Lodging - - 1.5 0.1-4.6 TOTAL QUOTED EQUITY SECURITIES 33.7 28.4 35.7 COLLECTIVE INVESTMENT FUNDS Quoted Malaysia REITS 9.5 6.0 7.0 Outside Malaysia Australia REITS 8.9 5.7 3.9 Real Estate 2.3 3.4 2.7 11.2 9.1 6.6 Hong Kong REITS 3.1 2.5 1.0 Japan Real Estate 0.4 - - REITS - 4.0 3.3 0.4 4.0 3.3 Singapore REITS 2.0 5.8 3.9 Real Estate - 0.8-2.0 6.6 3.9 TOTAL QUOTED COLLECTIVE INVESTMENT FUNDS 26.2 28.2 21.8 Asset Allocation for the Past Three Financial Periods (cont d) As at 30 April (Per Cent of Net Asset Value) 2017 2016 2015 % % % WARRANTS Quoted Outside Malaysia Thailand Warrants - - 0.3 TOTAL QUOTED WARRANTS - - 0.3 FIXED INCOME SECURITIES Quoted Outside Malaysia Indonesia Sovereign Bonds 2.2 1.6 1.2 Unquoted Ringgit-denominated Redeemable Non-convertible Bonds 27.3 30.3 37.2 TOTAL QUOTED AND UNQUOTED FIXED INCOME SECURITIES 29.5 31.9 38.4 DEPOSITS WITH FINANCIAL INSTITUTIONS 8.1 7.6 2.4 OTHER ASSETS & LIABILITIES 2.5 3.9 1.4
Overview This Interim Report covers the financial period from 1 November 2016 to 30 April 2017. (PBAREIF or the Fund) seeks to achieve capital growth and income over the medium to long term period by investing in companies that are principally engaged in property investment and development, hotel and resorts development and investment, real estate investment trusts (REITs), companies which have significant property or real estate assets and fixed income securities in domestic and regional markets. For the financial period under review, PBAREIF registered a return of +4.32% as compared to its Benchmark s return of +4.45%. The Fund s equity portfolio registered a return of +7.46% while its bond and money market portfolios registered returns of +2.57% and +1.53% respectively during the financial period under review. A detailed performance attribution analysis is provided in the sections below. For the five financial years ended 30 April 2017, the Fund registered a return of +37.70% as compared to its Benchmark s return of +46.93% over the same period. Returns from Start of Period 50% 40% 30% 20% 10% 0% -10% Performance of PBAREIF from 30 April 2012 to 30 April 2017 PBAREIF BENCHMARK 2012 2013 2014 2015 2016 2017 The Benchmark of the Fund is a composite index comprising 40% 3-Month Kuala Lumpur Interbank Offered Rate (KLIBOR) and 60% of a customised index based on the constituents within the real estate sector of the Standard & Poor s BMI Asia Pacific Index which is customised by S&P Dow Jones Indices LLC, to the following weights i.e. 20% Japan, 20% Australia, 20% Malaysia and the balance of 40% for the rest of the countries within the index universe currently including China H Shares, Hong Kong, Indonesia, New Zealand, the Philippines, Singapore, Taiwan, Korea and Thailand. The real estate sector is as defined by the then-current Global Industry Classification Standard (GICS). Effect of Distribution Reinvestment on Portfolio Exposures There were no distributions declared for the period ended 30 April 2017. Change in Portfolio Exposures from 31-Oct-16 to 30-Apr-17 31-Oct-16 30-Apr-17 Change Average Exposure Equities & Related Securities 59.5% 59.9% +0.4% 58.61% Bonds & Other Fixed Income Securities 33.2% 29.5% -3.7% 33.57% Money Market 7.3% 10.6% +3.3% 7.82% Returns Breakdown by Asset Class Returns On Investments Equities & Related Securities 7.46% 6.27% Market / Benchmark Benchmark Returns Index Used Average Attributed Exposure Returns Equity Benchmark 58.61% 4.37% Bonds & Other Fixed Income Securities 2.57% -0.10% Bond Index 33.57% 0.86% Money Market 1.53% 1.54% 1M-KLIBOR 7.82% 0.12% less: Expenses -1.03% Total Net Return for the Period 4.32% Equity Benchmark = S&P Customised Index Bond Index = Quant Shop MGS All Index 1M-KLIBOR = 1-Month Kuala Lumpur Interbank Offered Rate Equity Portfolio Review For the financial period under review, the Fund s equity portfolio registered a return of +7.46% and outperformed the equity Benchmark s return of +6.27%. The Fund outperformed its Benchmark as it was overweighted in selected regional markets such as Australia and the Philippines which outperformed the other regional markets over the financial period under review. The Fund commenced the financial period under review with an equity exposure of 59.5% and maintained a relatively high equity exposure throughout the review period to capitalise on investment opportunities in the domestic and regional markets. The Fund ended the financial period under review with an equity exposure of 59.9%. Based on an average equity exposure of 58.61%, the Fund s equity portfolio is deemed to have registered a return of +4.37% 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.
Country Allocation In terms of country allocation within the equity portfolio, the Fund s equity investment in Malaysia accounted for 12.4% of the Net Asset Value (NAV) of the Fund. Other than Malaysia, the top 5 countries accounted for 46.3% of the NAV of the Fund and 77.3% of the Fund s equity portfolio. The weightings of the top 5 countries excluding Malaysia are in the following order: Hong Kong (16.7%), Australia (12.7%), Japan (10.8%), Singapore (4.2%) and Philippines (1.9%). Bonds and Other Fixed Income Securities Portfolio Review For the financial period under review, the Fund s bond portfolio which consists of Ringgit-denominated corporate bonds and Indonesian Rupiah (IDR)-denominated government bonds registered a return of +2.57%. In comparison, the Quant Shop MGS All Index which tracks the performance of all Malaysian Government Securities (MGS) with maturities of 1 year and above, registered a return of -0.10% over the same period. The return of the Fund s bond portfolio was underpinned by the decline in both the Ringgit and IDR-denominated bond yields during the financial period under review. During the financial period under review, the Fund s bond exposure decreased from 33.2% to 29.5% due to the disposal of selected bond investments. Based on an average exposure of 33.57%, the bond portfolio is estimated to have contributed +0.86% to the Fund s overall return for the financial period 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 financial period under review, the Fund s money market portfolio, which was invested primarily in deposits, yielded a return of +1.53%. In comparison, the 1-Month Kuala Lumpur Interbank Offered Rate (1M-KLIBOR) registered a return of +1.54% over the same period. During the financial period under review, the Fund s exposure to money market investments increased from 7.3% to 10.6% following the disposal of selected bond investments. Based on an average exposure of 7.82%, the money market portfolio is estimated to have contributed +0.12% to the Fund s overall return for the financial period under review. Stock Market Review Commencing the financial period under review at 1,672.46 points, the FBM KLCI was dampened by foreign fund outflows in November 2016 following Trump s presidential victory which spurred expectations of rising interest rates in the U.S. However, the market subsequently rebounded in December 2016 in tandem with higher oil prices. The FBM KLCI continued its uptrend in January 2017, largely due to positive sentiment arising from the new U.S. president s pro-growth policies. The positive sentiment continued into February 2017 as the FBM KLCI broke above the psychological level of 1,700 points in mid-february. After some profit-taking activities towards the end of February 2017, the Index rebounded and resumed its uptrend in March 2017 amid foreign fund inflows. Led by sustained buying support for selected blue chips, the Index rose to touch a near 2-year intraday high of 1,772 points on 28 April 2017. The FBM KLCI closed at 1,768.06 points to register a gain of 5.72% for the financial period under review. The regional equity markets, as proxied by the Morgan Stanley Capital International All Countries Far-East Ex-Japan (MSCI FExJ) Index, commenced the financial period under review at 508.69 points. Regional markets retraced in November and December 2016 following the unexpected result of the U.S. presidential election as funds flowed back to developed markets. The Index started 2017 on a stronger note, supported by a weaker U.S. Dollar and better economic data from China. Resilient corporate earnings supported the regional markets in March and April 2017. The MSCI FExJ Index closed at 557.00 points, registering a gain of 9.50% (+13.31% in Ringgit terms) for the financial period under review. Regional markets, namely the Singapore, Australia, Hong Kong, Thailand, Japan, Indonesia and Philippine markets registered returns of +16.29%, +13.29%, +10.74%, +9.64%, +7.27%, +6.21% and +3.75% (in Ringgit terms) respectively for the financial period under review. Index 570 550 530 510 490 470 450 MSCI AC Far-East Ex-Japan Index (31 October 2016-30 April 2017) Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 The real estate sector of the S&P BMI Asia Pacific Index, which measures the returns of property stocks and REITs listed in regional markets, registered a gain of 2.70% (+6.27% in Ringgit terms) for the financial period under review. In Hong Kong, residential property prices began to rise in 3Q 2016 as commercial banks offered competitive and favourable mortgage rates. However, Hong Kong s property stocks were negatively impacted in late 2016 when the government raised the stamp duty for all residential purchases to 15% in November 2016 and on concerns over rising interest rates after Trump was elected as the new U.S. president. Property stocks in China registered lacklustre performances for the financial period under review as the Chinese government had implemented a series of tightening measures in several cities since March 2016 to prevent excessive property price surges.
In Japan, real estate stock prices rose on renewed inflationary expectations in 4Q 2016 before tapering off in January 2017. The residential property supply and demand situation in major cities remained tight on the back of relocation demand from redevelopment projects and demolition of old buildings. Meanwhile, office demand was affected by the strengthening of the Yen which weighed on Japanese corporate earnings. Consumer sentiment has been deteriorating and there is also a possibility that demand for hotel accommodation in Japan could begin to fade. Amid the rising interest rate environment following a 25 basis points (bps) hike in the U.S. Federal funds rate in December 2016, Australian REITs have been facing significant selling pressure in view of more U.S. Federal funds rate hikes in the coming years. Nonetheless, Australian REITs will remain a key investment asset as they own quality assets which are generating sustainable rental income with decent annual rental growth over the long-term period. The fundamentals of the Malaysian property market remain challenging as local banks continue to tighten mortgage lending amid rising household debt and affordability issues. Due to oversupply concerns especially on high-rise developments, most of the property companies are slowing their launches and lowering their sales targets while launching low to mid-range properties to accommodate mass market demand. In other South-East Asian countries such as Indonesia and Thailand, their accommodative monetary policies, rising middle-income groups and ongoing implementation of infrastructure projects continue to support property demand in these markets. Bond Market and Money Market Review The domestic bond market s consolidation deepened following the unexpected outcome of the U.S. presidential election in November 2016, which spurred expectations of rising inflation and interest rates under the new U.S. administration s aggressive expansionary fiscal plans. Most emerging market currencies and bond prices retraced amid concerns of capital outflows on expectations of higher U.S. interest rates. The domestic bond market subsequently recovered mildly in December 2016, aided by a rebound in crude oil prices following the decision by the Organization of Petroleum Exporting Countries (OPEC) and non-opec members to lower oil production beginning January 2017. The recovery in the domestic bond market was sustained through January 2017 alongside a firmer Ringgit. The domestic bond market was mixed in February 2017 with the yields of longtenure MGS trending lower due to firmer U.S. Treasuries. Domestic bonds were steadily traded following the March Federal Open Market Committee (FOMC) meeting where the U.S. Federal Reserve hiked the Federal funds rate by 25 bps to a range of 0.75%-1.00%. However, the buying eased towards the end of March as the domestic inflation rate touched a high of 4.5% in February. The domestic bond market subsequently rebounded in April 2017 on the back of a stronger Ringgit. For the financial period under review, the yields of 3-year and 10-year MGS rose by 27 bps and 44 bps to 3.21% and 4.05% respectively, mainly driven by market consolidation in 4Q 2016. The 1-Month Bank Negara Weighted Average Interbank Rate decreased from 3.19% to 3.08%, averaging at 3.10% over the financial period under review. Following the unexpected outcome of the U.S. presidential election in November 2016, global bond markets experienced increased volatility amid concerns that the fiscal policies under the new U.S. administration would lead to higher inflation and interest rates. The Indonesian bond market was similarly affected and the bond yields trended higher as investors reduced their bond holdings in various emerging markets. However, the Indonesian bond market recovered in December 2016 and January 2017 with the return of foreign fund flows, supported by the release of solid domestic economic data. The Indonesian bond market strengthened further in February after Moody s revised the outlook for Indonesia s sovereign rating to positive from stable. News on the possibility of a sovereign rating upgrade by Standard & Poor s (S&P) supported the Indonesian bond market in March. The Indonesian bond market was largely unchanged in April 2017, with Bank Indonesia (BI) maintaining its benchmark policy rate at 4.75% at its April meeting. For the financial period under review, the yields of 3-year and 10-year Indonesian Government Bonds fell by 28 bps and 20 bps respectively to 6.60% and 7.05%. Over the same period, the Rupiah depreciated by 2.1% from 13,048 to 13,329 against the U.S. Dollar. Economic Review Malaysia s GDP growth moderated from 5.0% in 2015 to 4.2% in 2016 on the back of slower investment spending and exports. Growth in the services sector rose from 5.1% in 2015 to 5.6% in 2016. Meanwhile, growth in construction activities eased from 8.2% to 7.4% over the same period. Malaysia s export growth accelerated to 19.8% in the first two months of 2017 from 1.1% in 2016 due mainly to higher exports of electrical and electronic products. Import growth surged to 21.5% from 1.9% over the same period. Malaysia s cumulative trade surplus widened to RM13.4 billion in the first two months of 2017 compared to RM12.7 billion in the prior year. Due to capital outflows, Malaysia s foreign reserves decreased to US$95.4 billion as at end-march 2017 compared to US$97.0 billion a year ago. Malaysia s inflation rate rose to 4.3% in 1Q 2017 from 2.1% in 2016 amid higher transportation costs arising from elevated fuel prices. Bank Negara Malaysia (BNM) maintained the Overnight Policy Rate (OPR) at 3.00% to support economic activities. Loans growth increased to 6.0% in 1Q 2017 from 5.3% in 2016 on the back of higher demand from the manufacturing, construction and wholesale & retail sectors. The Federal Government s budget deficit in 2016 inched lower to 3.1% of GDP from 3.2% of GDP in 2015. The budget deficit in 2016 was in line with the 3.1% target projected by the Ministry of Finance.
On the regional front, Singapore s GDP growth rose from 2.0% in 2016 to 2.5% in 1Q 2017 due to higher output from the manufacturing and services sectors. Singapore s inflation rate turned positive at +0.6% in 1Q 2017 compared with -0.5% in 2016 amid higher transportation costs. Indonesia s economic growth edged up from 4.9% in 2015 to 5.0% in 2016 on the back of resilient consumer spending and higher net exports. Driven by higher housing and transportation costs, the inflation rate climbed to 3.6% in 1Q 2017 from 3.5% in 2016. To support domestic economic activities, BI maintained its new benchmark interest rate at 4.75%. Led by higher consumer spending and export growth, Thailand s GDP growth gained pace from 2.9% in 2015 to 3.2% in 2016. The inflation rate rose to 1.3% in 1Q 2017 from 0.2% in 2016 due to higher transportation costs. The Bank of Thailand maintained its policy interest rate of 1.50% to support economic growth. The Philippines GDP growth increased from 5.9% in 2015 to 6.8% in 2016 amid robust domestic demand. Its inflation rate rose from 1.8% in 2016 to 3.2% in 1Q 2017 on higher housing and transportation costs. In North Asia, China s GDP growth expanded from 6.7% in 2016 to 6.9% in 1Q 2017 amid firmer growth in the industrial sector. Industrial sector growth increased from 6.0% in 2016 to 6.5% in 1Q 2017 as manufacturing activities picked up. China s inflation rate softened to 1.4% in 1Q 2017 from 2.0% in 2016 on the back of lower food prices. To support China s economic activities, the People s Bank of China (PBoC) maintained its lending rate at 4.35%. Hong Kong s GDP growth moderated from 2.4% in 2015 to 1.9% in 2016 due to slower consumer and public spending. Meanwhile, Hong Kong s inflation rate eased to 0.5% in 1Q 2017 from 2.4% in 2016 amid moderating food and housing costs. To curb elevated residential property prices, Hong Kong s government introduced additional tightening measures in November 2016. Japan s GDP growth eased from 1.2% in 2015 to 1.0% in 2016 on the back of slower exports. The inflation rate turned positive at +0.3% in 1Q 2017 compared to -0.1% in 2016 amid higher fuel prices. To support economic growth and mitigate deflationary pressures, the Bank of Japan left its interest rate unchanged at -0.1%. Down under, Australia s GDP growth edged up from 2.4% in 2015 to 2.5% in 2016 due to resilient consumer spending and higher export growth. Australia s inflation rate climbed to 2.1% in 1Q 2017 from 1.3% in 2016 amid higher food prices and housing costs. To support domestic demand, the Reserve Bank of Australia (RBA) maintained its cash rate at 1.50%. Led by higher investment spending and export growth, U.S. GDP growth rose from 1.6% in 2016 to 1.9% in 1Q 2017. Investment spending increased by 2.0% in 1Q 2017 compared to a contraction of 1.6% in 2016 on the back of higher investment in equipment. Meanwhile, export growth gained pace to 3.1% in 1Q 2017 from 0.4% in 2016. At the FOMC meeting in March 2017, the Federal Reserve raised the Federal funds rate target range by 25 bps from 0.50%-0.75% to 0.75%-1.00%. The FOMC members expect that the ongoing strength of the economy will warrant gradual increases in the Federal funds rate. Eurozone GDP growth eased from 1.9% in 2015 to 1.7% in 2016 amid slower investment spending and export growth. At its monetary policy meeting on 27 April 2017, the European Central Bank (ECB) kept its main refinancing and deposit rates at 0.00% and -0.40% respectively. The ECB has extended its quantitative-easing program from end-march 2017 until the end of 2017. However, it reduced the monthly pace of bond-buying from 80 billion to 60 billion with effect from April 2017. In a referendum held on 23 June 2016, British voters voted in favour of exiting the European Union (EU). The United Kingdom (U.K.) formally notified its exit from the EU under Article 50 on 29 March 2017, which commences a two-year process of trade negotiations with the EU. Economic Outlook U.S. economic growth is projected to gain pace from 1.6% in 2016 to 2.2% in 2017, driven by a recovery in investment spending. In the Eurozone, economic growth is envisaged to edge down from 1.7% in 2016 to 1.6% in 2017 amid the potential impact of Brexit on various Eurozone economies. Down under, Australia s economic growth is expected to be sustained at 2.5% in 2017 compared to a similar growth rate in 2016 on the back of resilient investment spending. The financial and insurance services sector should maintain its current growth trajectory as low interest rates continue to underpin housing demand. In North Asia, China s GDP growth is estimated to marginally ease from 6.7% in 2016 to 6.6% in 2017 as economic growth continues to moderate due to structural reforms to transform the country to a more consumption and service-driven economy. Meanwhile, China s inflation rate is projected to inch up from 2.0% in 2016 to 2.1% in 2017. Hong Kong s GDP growth is expected to edge higher from 1.9% in 2016 to 2.1% in 2017 amid a recovery in external demand. Going forward, the Hong Kong government is anticipated to maintain its tightening stance on the residential property market. However, ample liquidity, demand for better living standards and resilient economic growth should lend support to Hong Kong s property market over the long term. Japan s economic growth is projected to inch higher from 1.0% in 2016 to 1.2% in 2017 on the back of resilient consumer spending. In South-East Asia, Singapore s GDP growth is estimated to be sustained at 2.0% in 2017 compared to a similar growth rate in 2016 on expectations of resilient external demand. Indonesia s GDP growth is expected to expand from 5.0% in 2016 to 5.3% in 2017 amid sustained growth in domestic demand. Thailand s GDP growth is envisaged to inch up from 3.2% in 2016 to 3.3% in 2017 on the back of resilient domestic demand. The Philippines GDP growth is projected to ease from 6.8% in 2016 to 6.5% in 2017 due to slower export growth.
Extracts Of Financial Statements On the domestic front, Malaysia s GDP growth is projected to edge up from 4.2% in 2016 to 4.4% in 2017 amid an anticipated strengthening of domestic demand. This will be supported by sustained consumer and investment spending backed by government measures to increase disposable incomes and the ongoing implementation of infrastructure projects. The budget deficit is projected to widen to RM40.3 billion (3.0% of GDP) in 2017 from RM38.7 billion (3.1% of GDP) in 2016, with revenue expanding by 3.4% to RM219.7 billion. Meanwhile, operating expenditure and net development expenditure for 2017 are expected to register growth rates of 3.7% to RM214.8 billion and 2.4% to RM45.3 billion respectively. Property Market Outlook and Investment Strategy Demand for properties in the region continues to be underpinned by the low interest rate environment. However, the property-tightening measures initiated by several countries a few years back to contain asset inflationary pressures and restrain household debt are still in place. These measures include raising the down-payment requirements for residential home buyers, imposing higher stamp duties to curb short-term speculative demand and increasing the land supply for residential development. Over the medium to long term, demand for regional properties remains supported by the high savings rate, ample liquidity, demographic changes and sustained economic growth in the Far-East region. Property markets in the region are also supported by rising urbanisation and demand for better living standards among the middle-income group. At the end of the review period, the Fund s investments were focused on selected markets, namely Indonesia and the Philippines, where the outlook for their property markets continued to show positive signs of recovery. Meanwhile, the Fund is cautious on the China and Hong Kong markets in the short term on the back of the recent imposition of tightening measures. Apart from the aforementioned countries, the Fund also invests in property stocks in Japan, Malaysia, Thailand, Singapore and Australia. The Fund will continue to review and rebalance its portfolio of investments accordingly with the objective of achieving capital growth and income over the medium to long term period by investing in companies that are principally engaged in property investment and development, hotel and resorts development and investment, REITs, companies which have significant property or real estate assets and fixed income securities in domestic and regional markets. Note: Q = Quarter The following pages are extracts of the audited financial statements of the Fund for the financial period ended 30 April 2017. The full set of the audited financial statements together with the Independent Auditors Report is available upon request without charge. Statement of Assets and Liabilities As at 30 April 2017 30.4.2017 31.10.2016 MYR 000 MYR 000 Assets Investments 136,961 154,529 Due from brokers/financial institutions, net 710 - Tax recoverable 141 141 Other receivables 142 119 Deposits with financial institutions 12,493 6,086 Cash at banks 3,515 7,857 153,962 168,732 Liabilities Due to brokers/financial institutions, net - 406 Due to the Manager, net 654 1,462 Due to the Trustee 8 9 Other payables 43 49 Distribution payable - 3,808 705 5,734 Total net assets 153,257 162,998 Net asset value ( NAV ) attributable to unitholders (Total equity) 153,257 162,998 Units in circulation (in 000) 457,607 507,721 NAV per unit (in sen) 33.49 32.10 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, PBAREIF 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.
Extracts Of Financial Statements (cont d) Extracts Of Financial Statements (cont d) Statement of Income and Expenditure 1.11.2016 to 30.4.2017 1.11.2015 to 30.4.2016 MYR 000 MYR 000 Income Interest income 1,345 1,868 Dividend income 1,422 1,568 Net gain/(loss) from investments 5,647 (3,228) Amortisation of premium, net of accretion of discount (20) (38) Net realised/unrealised foreign exchange gain/(loss) 221 (241) 8,615 (71) Less: Expenses Trustee s fee 51 64 Management fee 1,432 1,800 Audit fee 3 3 Tax agent s fee 1 1 Brokerage fee 144 161 Administrative fees and expenses 27 34 1,658 2,063 Net income/(loss) before taxation 6,957 (2,134) Taxation (114) (136) Net income/(loss) after taxation 6,843 (2,270) Statement of Changes in Net Asset Value Unitholders capital MYR 000 Retained earnings MYR 000 Total MYR 000 As at 1 November 2015 200,760 14,750 215,510 Creation of units 3,529-3,529 Cancellation of units (28,684) - (28,684) Net loss after taxation - (2,270) (2,270) As at 30 April 2016 175,605 12,480 188,085 As at 1 November 2016 143,448 19,550 162,998 Creation of units 3,562-3,562 Cancellation of units (20,146) - (20,146) Net income after taxation - 6,843 6,843 As at 30 April 2017 126,864 26,393 153,257 Net income/(loss) after taxation is made up as follows: Realised 5,946 (3,054) Unrealised 897 784 6,843 (2,270)
Extracts Of Financial Statements (cont d) Statement of Cash Flows 1.11.2016 to 30.4.2017 1.11.2015 to 30.4.2016 MYR 000 MYR 000 Cash flows from operating activities Proceeds from sale of investments 36,818 53,111 Purchase of investments (14,862) (16,124) Subscription of rights - (276) Maturity of deposits 727,163 1,032,253 Placement of deposits (733,570) (1,039,224) Interest income received 1,370 1,898 Net dividend income received 1,312 1,703 Trustee s fee paid (52) (66) Management fee paid (1,461) (1,856) Audit fee paid (4) (4) Payment of other fees and expenses (31) (35) Net cash inflow from operating activities 16,683 31,380 Cash flows from financing activities Cash proceeds from units created 3,562 3,529 Cash paid on units cancelled (20,925) (29,258) Distribution paid (3,808) (3,444) Net cash outflow from financing activities (21,171) (29,173) Net (decrease)/increase in cash and cash equivalents (4,488) 2,207 Effect of change in foreign exchange rates 146 (282) Cash and cash equivalents at the beginning of the financial period 7,857 483 Cash and cash equivalents at the end of the financial period 3,515 2,408