Capital Protection Mechanism

The Fund is not a Capital Protected Fund but it has a capital protected mechanism embedded in its structure.

The Fund’s portfolio is structured to ensure that your capital can be preserved through investments in a combination of Structured Products and PNB REIT whilst capitalizing on the returns derived from investing in PNB REIT as well as the potential returns of investing in Structured Products derived from exposure to the performance of the underlying asset(s).

The Fund’s capital protected mechanism is structured in the following manner:

(i) Via Structured Products (which have been issued in accordance with such relevant regulatory requirements as may be imposed by the Securities Commission and Bank Negara Malaysia) whereby any principal invested in the Structured Products is protected at maturity.

• Principal protection may be sought through financial instruments purchased by the issuer which the issuer considers appropriate for protecting the principal invested in the Structured Products and such financial instruments may in turn be managed under Dynamic Investment Allocation Mechanism (DIAM).
• The financial instruments could take the form of money market instruments (which generate income on a short term low risk basis) and/or fixed income instruments (which are bought at a discount to provide a nominal value equivalent to the capital sought to be protected at maturity). Interest earned or money not invested on those financial instruments may be used to purchase option(s) on the underlying(s).
• Under the DIAM, exposure is allocated between the underlying and risk free asset(s), depending on the performance of the underlying. Should the underlying underperforms, more exposure is then allocated to the risk free asset(s).

(ii) PNB REIT’s capital protected mechanism:-

• The Fund will also be investing in units of PNB REIT which offer potential regular income and upside potential through exposure in properties. PNB REIT has principal protection features whereby its Properties have a buy-back option from the respective vendors to repurchase the Properties at the highest price offered by third party purchasers or the original purchase price plus capital expenditure on the respective property, whichever is higher. and subject to the REITs Guidelines.

Detailed Information on the Investments of PNB SIF

Structured Products

The Structured Products offer principal or capital protection at maturity with the potential upside exposure linked to one or more assets such as global equities, commodities, currencies interest rates, indices or any other underlying(s) approved by the Investment Committee.

Principal protection may be provided through the purchase of financial instruments which the issuer considers appropriate for protecting the principal invested in the Structured Products and such financial instruments may in turn be managed under DIAM. Principal invested in the Structured Products is protected if the Structured Products are redeemed on the maturity date of the Structured Products.

The Fund will adopt an active trading strategy in the portfolio of Structured Products, whereby the Investment Manager has the option to increase or decrease the Fund’s allocation in Structured Products, taking into account analysis and considerations on the prevailing market and economy outlook, valuations and liquidity requirements. Investors should note that under this active asset allocation strategy, not all Structured Products invested into by the Fund may necessarily be held to maturity, and Structured Products not held to maturity will not be subject to principal protection.