Fund Information Fund Name (PBIBF) Fund Category Sukuk Fund Investment Objective To provide annual income to investors through investment in Islamic debt securities. 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 PBIBF as at 30 June 2018 Size of holdings No. of % of No. of units unitholders unitholders held (million) 5,000 and below 1,154 24.04 3 5,001 to 10,000 883 18.40 6 10,001 to 50,000 2,006 41.79 46 50,001 to 500,000 723 15.06 79 500,001 and above 34 0.71 64 Total 4,800 100.00 198 Note: Excluding Manager s Stock. Fund Performance Average Total Return for the Following Years Ended 30 June 2018 Average Total Return of PBIBF (%) 1 Year 4.21 3 Years 4.69 5 Years 4.49
Fund Performance Fund Performance Annual Total Return for the Financial Years Ended 30 June Year 2018 2017 2016 2015 2014 PBIBF (%) 4.21 4.67 4.57 5.52 1.73 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 30 June 2018 2017 2016 Unit Prices (MYR)* Highest NAV per unit for the year 1.1634 1.1771 1.1838 Lowest NAV per unit for the year 1.1154 1.1251 1.1242 Net Asset Value (NAV) and Units in Circulation (UIC) as at the End of the Year Total NAV (MYR 000) 223,376 209,411 210,001 UIC (in 000) 202,428 187,582 186,875 NAV per unit (MYR) 1.1035 1.1164 1.1238 Total Return for the Year (%) 4.21 4.67 4.57 Capital growth (%) -1.21-0.95-1.38 Income (%) 5.49 5.67 6.03 Management Expense Ratio (%) 0.80 0.80 0.79 Portfolio Turnover Ratio (time) 0.78 0.78 0.53 * 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. - 1 Distribution and Unit Split Financial year 2018 2017 2016 Date of distribution 29.6.18 30.6.17 30.6.16 Distribution per unit Gross (sen) 6.00 6.00 6.00 Net (sen) 6.00 6.00 6.00 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 116.35 117.64 118.38 Less: Net distribution per unit (6.00) (6.00) (6.00) Net asset value after distribution 110.35 111.64 112.38 Past performance is not necessarily indicative of future performance and unit prices and investment returns may go down, as well as up. Asset Allocation for the Past Three Financial Years As at 30 June (Per Cent of NAV) 2018 2017 2016 % % % UNQUOTED SUKUK Ringgit-denominated Sukuk 93.0 90.6 90.3 Government Investment Issues 2.2 2.4 2.5 TOTAL UNQUOTED SUKUK 95.2 93.0 92.8 COLLECTIVE INVESTMENT SCHEMES Unquoted Funds 1.4 - - TOTAL UNQUOTED COLLECTIVE INVESTMENT SCHEMES 1.4 - - SHARIAH-BASED PLACEMENTS WITH FINANCIAL INSTITUTIONS 11.3 11.2 12.7 OTHER ASSETS & LIABILITIES -7.9-4.2-5.5
Statement Of Distribution Of Returns Sen Per Unit Gross Distribution 6.0000 Net Distribution 6.0000 Total Returns 4.7100 Effects of Distribution on NAV per unit before and after Distribution: Before After Distribution Distribution NAV per unit (MYR) 1.1635 1.1035 Overview This Annual Report covers the fi nancial year from 1 July 2017 to 30 June 2018. (PBIBF or the Fund) seeks to provide annual income to investors through investment in Islamic debt securities. For the fi nancial year under review, PBIBF registered a return of +4.21% as compared to its Benchmark 12-Month General Investment Account (GIA) rate which yielded a return of +3.27%. For the fi ve fi nancial years ended 30 June 2018, the Fund registered a total return of +22.45% and outperformed its Benchmark s return of +16.85% over the same period. As the Fund had 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 PBIBF from 30 June 2013 to 30 June 2018 25% PBIBF BENCHMARK 20% Returns from Start of Period 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 6.00 sen per unit (net distribution of 6.00 sen per unit) for the fi nancial year ended 30 June 2018 had the effect of reducing the Net Asset Value (NAV) of the Fund after distribution. As a result, the NAV per unit of the Fund was reduced to RM1.1035 from RM1.1635 after distribution. Effect of Distribution Reinvestment on Portfolio Exposures 30-Jun-18 Before Distribution After Distribution Reinvestment* Reinvestment* Sukuk 95.2% 90.3% Islamic Money Market 4.8% 9.7% * Assumes full reinvestment.
Change in Portfolio Exposures from 30-Jun-17 to 30-Jun-18 Average 30-Jun-17 30-Jun-18 Change Exposure Sukuk 88.3% 90.3% +2.0% 90.50% Islamic Money Market 11.7% 9.7% -2.0% 9.50% Returns Breakdown by Asset Class Market / Returns On Benchmark Benchmark Average Attributed Investments Returns Index Used Exposure Returns Sukuk 5.26% 3.29% Bond Index 90.50% 4.76% Islamic Money Overnight Market 3.10% 3.07% Islamic Rate 9.50% 0.29% less: Expenses -0.84% Total Net Return for the Year 4.21% 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 Government Investment Issues (GII) and corporate sukuk registered a return of +5.26%. 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 +3.29% over the same period. The Fund s sukuk portfolio outperformed the Quant Shop GII All Index as GII yields moved higher relative to corporate sukuk yields during the financial year under review. During the fi nancial year under review, the Fund s sukuk exposure increased from 88.3% to 90.3% as the Fund continued to capitalise on investment opportunities in the sukuk market. Based on an average exposure of 90.50%, the sukuk portfolio is estimated to have contributed +4.76% 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 +3.10%. In comparison, the Overnight Islamic Interbank Money Market Rate (Overnight Islamic Rate) registered a return of +3.07% 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 9.7% as funds were mobilised into sukuk investments. Based on an average exposure of 9.50%, the Islamic money market portfolio is estimated to have contributed +0.29% to the Fund s overall return for the fi nancial year under review. Sukuk Market and Islamic Money Market Review Commencing the fi nancial year under review, the domestic sukuk market eased amid higher global bond yields following the announcement of the second U.S. interest rate hike in 2017, coupled with growing concerns that the U.S. Federal Reserve may reduce its holdings of government and mortgage bonds. Buying interest returned to the domestic sukuk market in August 2017 on the back of fi rmer U.S. Treasuries (UST) a broadly weaker U.S. Dollar as well as accelerating economic growth and lower infl ation in Malaysia. The domestic sukuk market subsequently retreated in September and October 2017, driven by the Federal Reserve s announcement that it would start its balance sheet reduction program in October 2017, while affi rming the likelihood of a 25 basis points (bps) rate hike in December 2017. Buying interest gradually returned to the domestic sukuk market in November and December 2017 on the back of a fi rmer Ringgit. In January and February 2018, the domestic sukuk market softened on the back of higher U.S. Treasury yields and weaker Ringgit, coupled with BNM increased its Overnight Policy Rate (OPR) by 25 bps to 3.25% on 25 January 2018. While the domestic sukuk market rebounded briefl y in March 2018 in tandem with a rally in U.S. Treasuries amid concerns over rising trade tensions between the U.S. and China, the market subsequently retreated in April through June 2018, mainly on concerns over higher U.S. interest rates as the 10-year U.S. Treasury yield breached the 3.0% mark and the U.S. Dollar continued to strengthen against the Ringgit. For the fi nancial year under review, the yield of 3-year GII eased by 3 bps to 3.60%, while the yield of 10-year GII rose by 21 bps to close at 4.31%. The Overnight Islamic Rate commenced the fi nancial year under review at 3.00% and ended the fi nancial year under review higher at 3.21%. Economic Review Malaysia s GDP growth eased from 5.9% in 2017 to 5.4% in 1Q 2018 on the back of slower investment spending and export growth. Growth in manufacturing activities moderated from 6.0% in 2017 to 5.3% in 1Q 2018. Meanwhile, growth in the services sector rose from 6.2% to 6.5% over the same period. Malaysia s export growth softened to 7.8% in the fi rst four months of 2018 compared to 18.9% for the whole of 2017 due mainly to slower exports of electrical and electronic products. Import growth decelerated to 1.6% from 19.9% over the same period on the back of lower imports of capital and intermediate goods. Malaysia s cumulative trade surplus widened to RM46.4 billion in the fi rst four months of 2018 compared to RM27.5 billion in the corresponding period of the prior year. Due to capital infl ows, Malaysia s foreign reserves increased to US$108.5 billion as at end-may 2018 compared to US$98.0 billion a year ago.
Malaysia s inflation rate slowed to 1.7% in the first five months of 2018 from 3.7% in 2017 amid moderating food prices and transportation costs. On 25 January 2018, BNM raised the OPR by 25 bps from 3.00% to 3.25% on the back of resilient economic growth. Loans growth climbed to 4.9% in the fi rst fi ve months of 2018 from 4.1% in 2017 due to higher demand from the household sector. 7.0 6.0 5.0 4.0 % 3.0 2.0 1.0 0.0 5.5 Malaysia s Annual GDP Growth 4.7 6.0 5.1 2012 2013 2014 2015 2016 2017 2018F Source: Bloomberg Led by higher investment spending and export growth, U.S. GDP growth rose from 2.3% in 2017 to 2.8% in 1Q 2018. Investment spending increased from 3.3% in 2017 to 5.8% in 1Q 2018 due to higher investment in equipment. Likewise, export growth expanded from 3.4% to 4.0% over the same period. At the Federal Open Market Committee (FOMC) meeting on 12-13 June 2018, the Federal Reserve raised the Federal funds rate target range by 25 bps from 1.50%-1.75% to 1.75%-2.00%. Eurozone GDP growth inched down from 2.6% in 2017 to 2.5% in 1Q 2018 amid a slowdown in consumer spending and export growth. At its monetary policy meeting on 14 June 2018, the European Central Bank (ECB) kept its main refi nancing and deposit rates at 0.00% and -0.40% respectively. The ECB will continue its quantitative-easing program at the monthly pace of 30 billion until the end of September 2018. Thereafter, the monthly pace of bond-buying will be reduced to 15 billion until the end of the program in end-december 2018, subject to the medium-term inflation outlook. In a referendum held on 23 June 2016, British voters voted in favour of exiting the European Union (EU). The United Kingdom (UK) formally notifi ed of its exit from the EU under Article 50 on 29 March 2017, which commences a 2-year process of trade negotiations with the EU. 4.2 5.9 5.5 On the domestic front, Malaysia s GDP growth is estimated to ease from 5.9% in 2017 to 5.5% in 2018 amid moderating export growth. However, domestic demand is projected to be supported by sustained consumer spending. The FOMC increased the Federal funds target rate by another 25 basis points to 1.75%-2.00% range in June and stated that it will accelerate its balance sheet reduction program from US$30 billion to US$40 billion per month starting July 2018, as scheduled. Looking ahead, global bond yields may trend higher in tandem with the prospect of further rate hikes in the U.S. amid the country s sustained economic growth. However, ongoing domestic activities should help to underpin the domestic sukuk market. 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 Islamic debt securities. 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, PBIBF has not received goods or services by way of soft commissions. Outlook and Investment Strategy U.S. economic growth is projected to edge up from 2.3% in 2017 to 2.9% in 2018, driven by higher investment spending on the back of tax reform measures. In the Eurozone, economic growth is envisaged to ease from 2.6% in 2017 to 2.2% in 2018 on expectations of a moderation in consumer and investment spending.
Statement Of Assets And Liabilities As at 30 June 2018 Statement Of Income And Expenditure 2018 2017 MYR 000 MYR 000 Assets Investments 215,716 194,807 Due from financial institutions, net - 2,536 Other receivables 4 12 Shariah-based placements with fi nancial institutions 25,237 23,535 Cash at bank 50 50 241,007 220,940 Liabilities Due to fi nancial institutions, net 5,186 - Due to the Manager, net 274 246 Due to the Trustee 7 7 Other payables 18 21 Distribution payable 12,146 11,255 17,631 11,529 Total net assets 223,376 209,411 Net asset value ( NAV ) attributable to unitholders (Total equity) 223,376 209,411 Units in circulation (in 000) 202,428 187,582 NAV per unit, ex-distribution (in MYR) 1.1035 1.1164 2018 2017 MYR 000 MYR 000 Income Profi t from Shariah-based placements 647 691 Income from sukuk 13,533 13,081 Net (loss)/gain from investments (226) 753 Amortisation of premium, net of accretion of discount (2,697) (2,538) Non-permissible income - 9 11,257 11,996 Less: Expenses Trustee s fee 84 83 Management fee 1,789 1,772 Audit fee 7 7 Tax agent s fee 3 3 Administrative fees and expenses 21 25 Payment to charitable bodies - 9 1,904 1,899 Net income before taxation 9,353 10,097 Taxation - - Net income after taxation 9,353 10,097 Net income after taxation is made up as follows: Realised 10,602 11,001 Unrealised (1,249) (904) 9,353 10,097 Final distribution for the financial year 12,146 11,255
Statement Of Changes In Net Asset Value Statement Of Cash Flows Unitholders Retained capital earnings Total MYR 000 MYR 000 MYR 000 As at 1 July 2016 189,831 20,170 210,001 Creation of units 21,666-21,666 Cancellation of units (21,098) - (21,098) Net income after taxation - 10,097 10,097 Distribution - (11,255) (11,255) As at 30 June 2017 190,399 19,012 209,411 As at 1 July 2017 190,399 19,012 209,411 Creation of units 37,409-37,409 Cancellation of units (20,651) - (20,651) Net income after taxation - 9,353 9,353 Distribution - (12,146) (12,146) As at 30 June 2018 207,157 16,219 223,376 2018 2017 MYR 000 MYR 000 Cash flows from operating activities Proceeds from sale/redemption of investments 169,904 171,373 Purchase of investments (185,117) (174,668) Maturity of Shariah-based placements 4,888,293 4,808,913 Shariah-based placements (4,889,995) (4,805,830) Profi t from Shariah-based placements received 655 702 Income from sukuk received 12,636 12,151 Non-permissible income received - 9 Trustee s fee paid (84) (83) Management fee paid (1,792) (1,769) Audit fee paid (7) (7) Tax agent s fee paid (3) (3) Payment of other fees and expenses (24) (25) Payment to charitable bodies - (9) Net cash (outflow)/inflow from operating activities (5,534) 10,754 Cash flows from financing activities Cash proceeds from units created 37,404 21,667 Cash paid on units cancelled (20,615) (21,208) Distribution paid (11,255) (11,213) Net cash inflow/(outflow) from financing activities 5,534 (10,754) 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