Malta High Income Fund Accumulator

The Fund aims to maximise the total level of return through investment, primarily in debt securities and money market instruments issued by the Government of Malta, and equities and corporate bonds issued and listed on the MSE.

The Investment Manager may also invest directly or indirectly up to 15% of its assets in “Non- Maltese Assets”. The Investment Manager will maintain an exposure to local debt securities of at least 55% of the value of the Net Assets of the Fund.

The Fund is actively managed, not managed by reference to any index

The Investment Manager of the CC High Income Bond Funds – EUR and USD has the duty to ensure that the underlying investments of the funds are well diversified. According to the prospectus, the investment manager has to abide by a number of investment restrictions to safeguard the value of the assets

• The Investment Manager may invest up to 10% of the net assets of the Sub-Fund in un-listed Maltese and/or Non-Maltese Assets. As far as the “Non-Maltese Assets” segment of the Sub-Fund is concerned, the Investment Manager will not be targeting any international debt securities of any particular duration or coupon. However, the Sub-Fund is generally not expected to hold investments that, at the time of investment, are rated below “B3” by Moody’s or below “B-“ by S&P or in bonds determined to be of comparable quality by the Investment Manager.
• The Investment Manager will not be targeting any local debt securities (debt securities and money market instruments issued or guaranteed by the Government of Malta and/or local corporate bonds issued and listed on the Malta Stock Exchange) of any particular duration or coupon.
• The Investment Manager will, at all times, maintain a direct exposure to local debt securities (debt securities and money market instruments issued or guaranteed by the Government of Malta and/or issued and listed on the Malta Stock Exchange) of at least 55% of the value of the Net Assets of the Sub-Fund.
• The Sub-Fund may also invest in term deposits held with credit institutions regulated in Malta and other EU, EEA and OECD Member States.
• This Sub-Fund shall not invest, in the aggregate, more than 10% of the Net Assets of the Sub-Fund in units or shares of other UCITS or other CISs.

September 2025

Introduction

Malta’s economy grew by 2.7% year-on-year in Q2 2025, slowing from 3.0% in the previous quarter. This marked the weakest growth rate since the economic contraction in Q4 2020, driven largely by sharp slowdowns in household consumption (2.2% vs. 5.1%) and government spending (2.2% vs. 9.8%). On the trade front, imports of goods and services jumped, while exports also gained momentum.

Inflation rose to 2.7% from 2.5% in the previous month, primarily driven by higher prices for food and non-alcoholic beverages, furnishings and household equipment, recreation and culture, and restaurants and hotels – likely supported by stronger tourism demand during the summer season. Additionally, prices for clothing and footwear rebounded during the month.

Market environment and performance

In the euro area, business activity strengthened steadily throughout the year, with the leading composite PMI indicators signaling solid expansion in the current quarter. The HCOB Eurozone Composite PMI edged up to 51.2 in September from 51.0 in August, broadly in line with expectations and marking the fastest pace of private-sector growth in 16 months. The expansion was driven primarily by the services sector, which posted its highest reading of the year and offset an unexpected contraction in manufacturing.

Consumer price inflation in the Eurozone stood at 2.0% in August 2025, slightly below a preliminary estimate of 2.1%, as energy costs declined more than initially thought. Headline inflation has now matched the European Central Bank’s 2% target for a third straight month, reinforcing expectations that monetary policy will remain steady for some time.

On the policy front, the ECB left its three key interest rates unchanged, keeping the main refinancing rate at 2.15%, in line with expectations. The Governing Council reiterated its commitment to maintaining inflation at 2% over the medium term, emphasizing a cautious, data-driven approach on a meeting-by-meeting basis.

Fund performance

In August, the Malta High Income Fund posted a loss of 0.20%. The portfolio manager remained proactive throughout the month, aligning with the fund’s mandate to enhance income yield. This was achieved by seizing opportunities, particularly in the IPO space within international markets. The strategy to increase the portfolio’s allocation to foreign bonds and equities was implemented, with several new foreign exposures added. Additionally, a position was opened in a newly issued local bond from AGB, set to start trading in the first week of October.

Market and investment outlook

In 2025, European sovereign bonds delivered modest returns amid a backdrop of stable inflation, cautious ECB policy, and evolving fiscal developments. Core markets like Germany saw yields rise slightly due to increased issuance and debt-related reforms, while peripheral markets such as Spain benefited from credit rating upgrades and strong investor demand. Political uncertainty in France weighed on sentiment, and overall performance varied across regions and credit quality.

Looking ahead, Malta’s economy is projected to remain strong through 2025, supported by low inflation, recent tax cuts, and an expected increase in tourist arrivals. These factors are likely to sustain domestic consumption and overall economic growth. With respect to the fund’s composition, we will continue to adjust the portfolio’s allocations as needed, with the goal of enhancing income yield through higher coupon bonds. This will also involve utilizing the allowed 15% allocation for non-Maltese assets.