Public China Ittikal Fund

Launch Date: 20 November 2007
Approved Fund Size: 1.5 Billion Units
Financial Year End: 30 November

Introduction

What’s so attractive about investing in the Greater China?

1. Rapid economic growth in the Greater China region.

China’s real GDP* has been growing at an average of 9.2%1 annually in the past 10 years

* GDP – Gross Domestic Product
1Source: Bloomberg, September 2007

Hong Kong and Taiwan are beneficiaries of China’s strong economic growth.

2. Greater China’s GDP growth is expected to be favorable; ranging from 4.5% to 11.2%2 in 2007/2008

2Source: Bloomberg, October 2007

Growth is expected to be supported by robust domestic consumption, which is propelled by rising income levels, urbanisation and favourable demographics. The Chinese economy is also poised to continue to benefit from strong private investment, which accounts for 41% (Source: Bloomberg, October 2007) of its GDP.

3. Proposed lifting of restrictions on overseas investments by the Chinese government announced on 20 August 2007 may potentially lead to stronger investor demand for China ‘H’ shares listed in Hong Kong.

All the current P/E of 28.1x, valuations of China ‘H’ shares are still significantly below the valuations of Chinese ‘A’ and ‘B’ shares listed on the mainland exchanges. In comparison, Hong Kong and Taiwan stocks are trading at lower P/Es compares to their regional peers.

Greater China Market Valuations

Indices Index Level as at 19 Oct ’07 P/E* (times) Dividend Yield
Shanghai Composite Index 5,818 45.5 0.5%
Hang Seng China Enterprises Index (China ‘H’ Shares)+ 19,722 28.1 1.0%
Hong Kong Hang Seng Index+ 29,465 20.6 2.1%
Taiwan Stock Market Index 9,612 16.1 3.3%

* For 2007 prospective earnings.
+ Indices on 18 October as the Hong Kong stock exchange was closed on 19 October.
Source: Bloomberg, October 2007

Performance of Greater China Stock Markets

Indices Index Level as at 19 Oct ’07 Returns (in %)
2004 2005 2006 2007 (2004-2007)*
Shanghai Composite Index 5,818 -15.4 -8.3 130.4 117.5 288.6
Hang Seng China Enterprises Index (China ‘H’ Shares)+ 19,722 -5.6 12.4 94.0 90.7 292.9
Hong Kong Hang Seng Index+ 29,465 13.2 4.5 34.2 47.6 134.3
Taiwan Stock Market Index 9,612 4.2 6.7 19.5 22.9 63.2

* Up to 19 October 2007
+ Indices on 18 October 2007 as the Hong Kong stock exchange was closed on 19 October.
Source:Lipper,October 2007

Prospects for the Greater China region remain exciting with the equity markets supported by sustained economic growth, high levels of savings and liquidity.

What is the historical return of Public China Ittikal Fund’s (PCIF) benchmark index?

The benchmark of Public China Ittikal Fund comprises 50% Dow Jones Islamic Market Hong Kong Indexsm and 20% FTSE Bursa Malaysia EMAS Shariah Index.

The returns for the individual components of the benchmark or Public China Ittikal Fund up to 19 October 2007 are as follows:

Index Performance (%)
1-Year 3-Year 5-Year
DJIM Hong Kong Indexsm 58.33 123.71 206.46
DJIM Taiwan Indexsm 27.57 78.33 99.38
FTSE Bursa Malaysia EMAS Shariah Index 50.25 61.90 106.36
Benchmark for Public China Ittikal Fund 47.55 98.33 155.83

The returns for the above indices are expressed in Ringgit terms.

Notes:
FTSE Bursa Malaysia EMAS Shariah Index is sourced from Lipper Asia Ltd. DJIM Taiwan Indexsm & DJIM Hong Kong Indexsm are sourced from Dow Jones Indexessm.

Past performance of the benchmark index is not an indication of its future performance.

Fund Profile

Fund Category: An equity fund (Shariah)

Fund Objective: To achieve capital growth over the medium-to long-term period by investing in a portfolio of Shariah-compliant investments in the Greater China region ad the balance in the domestic market.

Distribution Policy: Incidental

Risk Profile of Fund: High Risk

Investor Profile:

  • aggressive risk-reward temperament
  • medium-to long-term investor
  • can withstand extended periods of market highs and lows in pursuit of capital growth.

Transaction of Units

Service Charge After Offer Period:
Up to 6.5% of net asset value (NAV) per unit

Purchase and Redemption of Units After Offer Period:
At NAV per unit.

A service charge of up to 6.5% of NAV per unit is levied upon the purchase of units of Public China Ittikal Fund by investors. Public Mutual does not impose a repurchase charge on the sale of units of Public China Ittikal Fund by investors.

Repurchase of Units:
Unitholders may redeem units on any business day and receive payment of repurchase proceed within 10 days.

Switching Facilities:
During the offer period of Public China Ittikal Fund from 20 November 2007 to 10 December 2007, switching transactions involving Public China Ittikal Fund are not allowed other than for switching of low-load units of bond and money market funds under the Public Series of Shariah-Based Funds and Public Series of Funds into Public China Ittikal Fund.

After the offer period, unitholders may switch their investments between Public China Ittikal Fund and other funds under the Public Series of Sharia-Based Funds and Public Series of Funds on any Business Day. However, switching from a Shariah-based fund to a conventional fund is discouraged, especially for Muslim unitholders. Please refer to the fund prospectus for more details.

Cooling-Off Period:
Investors who are investing with Public Mutual for the first time may exercise their cooling-off wight within 6 business days from the date of receipt of the application form by Public Mutual and receive a full refund of the investment paid within 10 days of receipt of cooling-off notice by the Manager. This cooling-off right, however, shall not extend to a corporation or institution, the staff of Public Mutual and persons registered to deal in its unit trust funds.

Fees & Charges

Service Charge: Up to 6.5% of NAV per unit
Management Fee: 1.55% per annum of the NAV
Repurchase Charge: Nil

FAQ

Q1: What are the main features of Public China Ittikal Fund?

  • Public China Ittikal Fund is an Islamic equity fund that seeks to achieve capital growth over the medium-to long-term period by investing in a portfolio of Shariah-compliant investments in the Greater China region and the balance in the domestic market.
  • A minimum of 70% of the fund’s NAV will be invested in the Greater China region namely in Hong Kong, China and Taiwan markets.
  • The fund can also invest in China-based companies listed on overseas markets such as Singapore, the United States of America and other approved markets.
  • Equity exposure: Generally range from 75% to 90% of its NAV.

Q2: What i the investment strategy for Public China Ittikal Fund?

  • Public China Ittikal Fund is actively managed to achieve capital growth by investing in a diversified portfolio of Shariah-compliant blue chip stocks, index stocks and companies with growth prospects in the Greater China region and the balance in the domestic market.
  • A minimum of 70% of the fund’s NAV will be invested in the Greater China region namely in Hong Kong, China and Taiwan markets. The fund can also invest in China-based companies listed on overseas markets such as Singapore, the United States of America and other approved markets.
  • The fund may also invest in Islamic debt securities such as sovereign debt, corporate debt and Islamic money market instruments to help generate returns.
  • The fund’s investments may also include listed Shariah-compliant warrants and options to enhance its returns.

Q3: Why invest in Public China Ittikal Fund?

  • The fund allows investors the opportunity to participate in the long-term growth potential of a diversified portfolio of Shariah-compliant blue chip stocks, index stocks, growth stocks and fundamentally undervalued stocks in the Greater China region and the balance in the domestic market.

Q4:What level of risks will we be looking at when investing in Public China Ittikal Fund?

  • As the fund’s equity exposure generally ranges from 75% to 90% of its NAV. Public China Ittikal Fund may experience significant volatility in times of adverse market movements. To mitigate risks, the fund may invest in Islamic futures contracts and listed options to hedge against market volatility.
  • The asset allocation, liquidity management, diversification and hedging strategies employed are central to the efforts to manage the risks posed to the fund.

Q5: How does the fund manager ensure that all the fund’s investments are in compliance with Shariah requirements?

  • For securities listed on the Bursa Securities, compliance to Shariah requirements is primarily determined by the Shariah Advisory Council of the Securities Commission (SC). Otherwise, the Shariah Adviser of the fund, Islamic Banking and Finance Institute Malaysia Sdn Bhd (IBFIM) is consulted to ascertain their Shariah status.
  • The fund’s investments in foreign securities will be selected in accordance with the Dow Jones Islamic Market Indexessm and/or the securities classified as Shairah-compliant by the Shariah Adviser.
  • To ensure strict compliance with Shariah requirements, this list of Shariah-compliant securities will be updated by the Shariah Adviser twice yearly, where securities in the list will be reviewed for inclusion/exclusion from the said list.

Q6: Who are most suited to invest in Public China Ittikal Fund?

  • Investors who are upbeat with the long-term capital growth potential of Greater China namely Hong Kong, China and Taiwan markets, including China-based companies listed on overseas markets.
  • Existing and prospective investors with aggressive risk-reward temperament and can withstand extended periods of market highs and lows in pursuit of capital growth.

Q7: What is the minimum initial investment and minimum additional investment of the fund?

  • The minimum initial investment is RM1,000 and minimum additional investment is RM100.

Current Fund Prospectus

Prospectus of Public China Ittikal Fund dated 20 November 2007.

The prospectus is obtainable free-of-charge from Public Mutual unit trust consultants, Public Mutual Head Office, branches and agency offices.

“Dow Jones”, “Dow Jones Islamic Market Indexsm” and “Dow Jones Islamic Market Asia Ex-Japan Indexsm” are service marks of Dow Jones & Company, Inc. and have been licensed for use for certain purposes by Public Mutual Berhad. Public Mutual Berhad’s Public China Ittikal Fund based on the Dow Jones Islamic Market Indexsm, are not sponsored, endorsed, sold or promoted by Dow Jones and Dow Jones makes no representation regarding the advisability of investing in such product.

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2 comments so far

  1. yahaya on

    what is the benefit of buying after offer period and before offer period? Do you charge the same amount of service charge?

  2. neo9663333 on

    if you invest during the offer period, you will get more units investing the same amount of money. If i’m not mistaken, it’s 1%-5% (in this range but the exact figure i forgot)..

    anyway i’m not a unit trust agent, just to provide this for your information only ;)


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