UNIT TRUST CONSULTANT: Launch of Public Islamic Alpha-40 Growth Fund (PIA40GF) and Public Islamic Infrastructure Bond Fund (PIINFBF)

We are pleased to inform you that Public Mutual will launch the Public Islamic Alpha-40 Growth Fund (PIA40GF) and Public Islamic Infrastructure Bond Fund (PIINFBF) on 16 November 2010 (Tuesday).

The following are some of the pertinent details of the fund:

For more information about the new funds, you may refer to the prospectus which are available at all our branches.

Please do not hesitate to contact your respective Branch or Agent Consultant if you need further information. In the meantime, pls. refer FAQ (Frequently Asked Questions) for your reference.

FAQS FOR THE LAUNCH OF PUBLIC ISLAMIC ALPHA-40 GROWTH FUND (PIA40GF)

Key Message:

The Public Islamic Alpha-40 Growth Fund (PIA40GF) is an Islamic equity fund that seeks to achieve capital growth by investing up to a maximum of 40 stocks which comply with Shariah requirements.

FAQS

FAQS FOR THE LAUNCH OF PUBLIC ISLAMIC ALPHA-40 GROWTH FUND (PIA40GF)

Key Message:

The Public Islamic Alpha-40 Growth Fund (PIA40GF) is an Islamic equity fund that seeks to achieve capital growth by investing up to a maximum of 40 stocks which comply with Shariah requirements.

FAQS

Q1: What are the main features of Public Islamic Alpha-40 Growth Fund (PIA40GF)?

An Islamic equity fund that seeks to achieve capital growth by investing up to a maximum of 40 stocks which comply with Shariah requirements.
Equity exposure: generally range from 75% to 98% of its net asset value (NAV).
To achieve increased diversification, the fund may invest up to 30% of its NAV in selected foreign markets.
The foreign markets which the fund may invest in include Singapore, Taiwan, South Korea, Japan, Australia, New Zealand, Hong Kong, China, Thailand, Indonesia, Philippines and other markets.

Q2: What makes Malaysia an attractive market to invest in?

After rebounding by 45.2%1 in 2009, the Malaysian equity market, as proxied by the FBM KLCI, strengthened further above 1,400 points and closed at the current level of 1,466.97 points on 17 September 2010 amidst firmer offshore markets coupled with stronger-than-expected economic growth for the first half of 2010.
After contracting by 1.7%1 in 2009, the Malaysian economy is expected to grow by 6.8%2 in 2010 amid a rebound in the manufacturing and services sectors. However, Malaysia’s GDP growth is envisaged to ease to 5.2%2 in 2011 as export growth is expected to moderate.
The local equity market is supported by fair valuations and sustained domestic liquidity. At the KLCI’s closing level of 1,466.97 points on 17 September 2010, the local stock market is trading at a prospective P/E of 14.1x1 on 2011 earnings, which is below the market’s 10-year average P/E ratio of 16.5x1.
The local market is also supported by a gross dividend yield of about 3.3%1, which is line with the 10-year average of 3.5%1 and exceeds the current 12-month fixed deposit rate of 2.85%1.

Q3: What are the prospects for the Malaysian Shariah-based equity market? (to be provided

by Investment)

According to Bursa Malaysia as at 31 May 2010, 88% of the securities currently listed on the local bourse are Shariah-compliant representing about two-thirds of Bursa Malaysia’s market capitalisation.
Hence, local investors who are seeking to invest in instruments that are in accordance to Shariah principles will have access to an extensive selection of Shariah-compliant stocks across diversified industries and sectors.
Going forward, domestic Shariah compliant stocks are supported by below trend valuations, reasonable earnings growth and a sustained economic environment amidst accommodative real interest rates and reasonable liquidity conditions.

Q4: How do you identify the 40 Shariah-based stocks?

In identifying companies for investment, fundamental research is carried out whereby the financial health, industry prospects, management quality and past track records of the companies are considered.
The valuations of stocks are also assessed using valuation benchmarks such as Price Earnings Ratio (PER), Price to Net Tangible Assets Ratio (Price/NTA) and dividend yields.

Q5: What makes PIA40GF attractive to prospective investors?

PIA40GF allows investors the opportunity to participate in the long-term growth potential of a portfolio comprising up to 40 selected Shariah-compliant blue chip stocks, index stocks and growth stocks listed primarily on Bursa Securities and selected foreign markets.
As PIA40GF focuses its investment in a portfolio of up to 40 stocks, this allows the fund manager to adopt a more focused investment strategy. This enables investors the opportunity to achieve higher potential returns over the medium- to long-term as the fund invests in a concentrated portfolio of stocks.

Q6: Who are most suited to invest in PIA40GF?

PIA40GF is suitable for existing and prospective investors who:
have aggressive risk-reward temperament.
are medium- to long-term investors.
can withstand extended periods of market highs and lows in pursuit of capital growth.
would like to participate in the long-term growth potential of a concentrated portfolio of up to 40 quality stocks which comply with Shariah requirements.

Q7: What is the fund objective? How about the fund’s investment strategy?

Aims to achieve capital growth by investing in stocks which comply with Shariah requirements.
The fund is actively managed to achieve capital growth by investing in up to a maximum of 40 stocks which comply with Shariah requirements.
In addition to the domestic market, PIA40GF may invest up to 30% of its NAV in regional markets which include Singapore, Taiwan, South Korea, Japan, Australia, New Zealand, Hong Kong, China, Thailand, Indonesia, Philippines and other markets to achieve increased diversification.

Q8: What is the fund’s benchmark index? What is the historical return of the PIA40GF’s benchmark index?

An appropriate benchmark to be used to evaluate the performance of PIA40GF and its
component indices are as follows:
75% FTSE Bursa Malaysia Emas Shariah Index
15% customised index based on Top 100 constituents by market capitalisation of the S&P Shariah BMI Asia Ex-Japan Index
10% 3-month Islamic Interbank Money Market (IIMM) rate
This benchmark index has registered a total return of 9.86% for the 1-year period up to 31 August 2010.

Q9: What are some of the sectors that PIA40GF will be looki

ng to invest in?

Sectors which PIA40GF will look to invest in include plantation, oil & gas, automotive, consumer, infrastructure, telecommunications and technology.
Q10: What level of risks will we be looking at when investing in PIA40GF?
As the fund only invests in up to a maximum of 40 stocks, with an equity exposure ranging from 75% to 98% of its NAV, PIA40GF may experience significant volatility in times of adverse market movements.
The asset allocation, liquidity management and diversification strategies employed are central to the efforts to manage the risks posed to the fund.

Q11: When is PIA40GF going to be launched?

16 November 2010

Q12: What is the initial issue price? And when is the offer period?

The initial issue price is RM0.2500 per unit during the 21-day offer period from 16 November to 6 December 2010.

Q13: What is the approved fund size of PIA40GF?

The approved fund size for PIA40GF is 1.5 billion units.

Q14: Please tell us the service charge and the annual man

agement fee involved when investing in PIA40GF. Is there any repurchase charge?

The service charge is up to 5.5% of the NAV per unit after offer period.
The annual management fee is 1.5% per annum of the NAV.
There is no repurchase charge.

Q15: 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.

Q16: Will there be any special promotion to support the launch of PIA40GF? Please give us the details.

There will be special service charges offered for investments into PIA40GF during the offer period:

RM5,000 to RM9,999 per transaction 5.25% of Initial Issue Price per unit
RM10,000 and above per transaction 5.00% of Initial Issue Price per unit
Direct Debit Instruction (DDI) submitted during Offer Period 5.25% of net asset value (NAV)

FAQS FOR THE LAUNCH OF PUBLIC ISLAMIC INFRASTRUCTURE BOND FUND (PIINFBF)

Key Message:

The Public Islamic Infrastructure Bond Fund (PIINFBF) is an Islamic bond fund that seeks to provide annual income to investors through investments in sukuk of companies in the infrastructure sector.

FAQS

Q1: What are the main feature

s of Public Islamic Infrastructure Bond Fund (PIINFBF)?

An Islamic bond fund that seeks to provide annual income to investors througinvestments in sukuk of companies in the infrastructure sector.
Distribution policy: Annual income (on a best effort basis).
Invests up to 98% of its net asset value (NAV) in a portfolio of sukuk of companies involved in the infrastructure sector and the balance of its assets in Islamic money market instruments.
To increase diversification, the fund may invest up to 25% of its NAV in foreign sukuk.
The foreign markets which the fund may invest in include Singapore, United Kingdom, Japan, Australia, Hong Kong and other permitted markets.

Q2: What makes PIINFBF attractive to prospective in

vestors?

PIINFBF allows investors to access to the sukuk market, which is usually inaccessible to the average investor as it is a market for institutions where the standard transaction lot is RM5 million.
Sukuk issued by companies in the infrastructure sector are generally underpinned by predictable cash flows and stable income stream over the respective issuer’s concession period.
The fund may invest up to 25% of its NAV in foreign sukuk to increase diversification.

Q3: Who are most suited to invest in PIINFBF?

PIINFBF is suitable for existing and prospective investors who:
have conservative risk-reward temperament
seek stability of annual income with some safety of principal
medium-term investor
wish to participate in sukuk issued by companies in the infrastructure sector.

Q4: What is the fund objective? How about the fund’s investment strategy?

PIINFBF aims to provide annual income to investors through investments in sukuk of companies in the infrastructure sector.
PIINFBF seeks to meet its objective by investing up to 98% of its net asset value (NAV) in a portfolio of sukuk issued by companies in the infrastructure sector with the balance invested in Islamic money market instruments.
Infrastructure companies include power plant concessionaires, water treatment plant operators, telecommunication service providers, toll-road concessionaires and port operators.
The fund is actively managed and seeks to invest in sukuk that command higher yields than Islamic money market instruments.
To achieve increased diversification, the fund may invest up to 25% of its NAV in foreign sukuk if the returns are assessed to be promising.
The foreign markets which the fund may invest in include Singapore, United Kingdom, Japan, Australia, Hong Kong and other permitted markets.

Q5: As mentioned above, the fund seeks to invest in sukuk that command higher yields than Islamic money market instruments. How do you identify the sukuk?

Factors considered in identifying sukuk for the fund’s investment include the sukuk issuer’s financial track record, market share, cash flow generating ability, earnings growth and quality of earnings.
Comparison of yields and credit ratings with peers in the same industry sector will also be undertaken to identify sukuk with relatively attractive yields.

Q6: How do you ensure that the foreign sukuk are Shariah-compliant?

For any foreign sukuk to be designated as Shariah-compliant, the fund manager will first identify the
To ensure strict compliance with Shariah requirements, the Shariah Adviser will review the information memorandum or the prospectus of the foreign sukuk for details regarding the Shariah approvals and fatwa certifying such sukuk.
The Shariah Adviser will review the structure, contracts, assets and terms for the foreign sukuk issuance to ascertain if they comply with Shariah principles.

Q7: What is the fund’s benchmark index? What is the historical return of the PIINFBF’s benchmark index?

The benchmark for PIINFBF is based on average 12-months General Investment Account (GIA) rates of commercial banks.
The historical returns of the benchmark are 3.01% in 2009, 3.45% in 2008 and 3.72% in 2007.

Q8: What are some of the infrastructure companies (sub-sectors) that PIINFBF may be looking to invest in?

Power plant concessionaires and water treatment plant operators in the utilities subsector as well as telecommunication service providers.
Toll-road concessionaires and port operators in the transport sub-sector.

Q9: What level of risks will we be looking at when investing in PIINFBF?