INVESTORS' LETTER 1 MANAGER'S REPORT 2-9

Transcription

1 CONTENTS PAGE(S) INVESTORS' LETTER 1 MANAGER'S REPORT 2-9 Fund Objective and Policy Performance Data Market Review Fund Performance Portfolio Structure Market Outlook Investment Strategy Unit Holdings Statistics Soft Commissions and Rebates STATEMENT BY MANAGER 10 TRUSTEE S REPORT 11 INDEPENDENT AUDITORS REPORT STATEMENT OF COMPREHENSIVE INCOME 14 STATEMENT OF FINANCIAL POSITION 15 STATEMENT OF CHANGES IN EQUITY 16 STATEMENT OF CASH FLOWS 17 NOTES TO THE FINANCIAL STATEMENTS DIRECTORY 57 LIST OF CWA (an Agency force of CIMB-Principal) OFFICES 58-61

2 INVESTORS' LETTER Dear Valued Investors, Thank you for investing in CIMB-Principal Asset Management Berhad ( CIMB-Principal ) funds. At CIMB-Principal, we are dedicated to provide the best service and guidance to our valued customers. We believe this will ensure your relationship with us is a long and satisfying one. We will continuously strive for customer satisfaction in the products we deliver and service we provide. As we step into the second half of the year, we are pleased to share this wonderful news that CIMB- Principal has won more awards. These awards are important because it means that the consistent investment process we have in place, supported by strong portfolio risk management and oversight practices, has yielded top-performing investment results for our loyal investors. AsianInvestor Asset Management Awards 2016 Best Fund House in Malaysia The Asset Triple A Asset Servicing, Fund Management and Investors Awards 2016 Asset Management Company of the Year We thank you for your ongoing support that plays an integral part to drive us to where we are now. This industry achievement will further boost our Southeast Asia s aspirations to be the most valued investment manager offering total asset management solutions and further strengthen our investment capabilities with sound track record. In moving forward, we are committed to deliver a better customer experience to you. Hence, we are taking the next step to know you better. For your information, we have started a customer information update exercise through s, phone and registered mail so that we can interact better with you in the future. We would like to thank those who have updated their latest information with us. For those who have not updated their information, our friendly Customer Service Officers will be in touch with you soon. Alternatively, you are also strongly encouraged to contact our Customer Care Centre directly at or your Consultant to update your latest information. I wish all of you a blessed and rewarding year ahead. Happy investing! Yours faithfully, for CIMB-Principal Asset Management Berhad Munirah Khairuddin Chief Executive Officer/Executive Director 1

3 MANAGER S REPORT FUND OBJECTIVE AND POLICY What is the investment objective of the Fund? The Fund aims to achieve capital appreciation over the medium to long-term through all types of investments that have the potential for above average growth over time. Has the Fund achieved its objective? For the financial year under review, the Fund s total return was negative 6.40% while the benchmark was negative 8.74%. Nevertheless, the Fund s objective is still in place which is to provide capital growth over the long-term. What are the Fund investment policy and principal investment strategy? The Fund may invest between 70% to 98% (both inclusive) of its Net Asset Value ("NAV") in equities in order to gain long-term capital growth. The Fund may opt to invest in foreign equities up to a maximum of 30% of its NAV. Such foreign equities must be equity securities of companies domiciled in, listed in, and/or have significant operations in Asia ex Japan. Significant operations means major businesses of the company. For example, the Fund can invest in a company with significant business/operations in Thailand but listed on the New York Stock Exchange ("NYSE"). The threshold for significant operations would be if more than 30% of total group revenue derives from countries in Asia ex Japan. The calculation would be based on the most recent financial reports released by the companies (e.g. interim and annual reports). In line with its objective, the investment policy and strategy of the Fund will be to invest primarily in equities, with a bias towards growth stocks that have the potential to deliver long-term capital appreciation. To a lesser extent, the Fund invests in liquid assets primarily for the purpose of cash management. The investment management function for the foreign investments of this Fund has been delegated to CIMB-Principal Asset Management (S) Pte. Ltd. ("CIMB-Principal (S)") with the approval of the Securities Commission Malaysia ("SC"). CIMB Principal (S) will be responsible for investing and managing these foreign investments in accordance with the investment objective and within the investment restrictions. Fund category/type Equity/Growth How long should you invest for? Recommended between three (3) years and five (5) years or more Indication of short-term risk (low, moderate, high) High When was the Fund launched? 15 May 1991 What was the size of the Fund as at 30 April 2016? RM million ( million units) What is the Fund s benchmark? 70% Financial Times Stock Exchange ("FTSE") Bursa Malaysia Top 100 ("FBM100") Index + 30% Morgan Stanley Capital International ("MSCI") All Country ("AC") Asia ex Japan Note: The benchmark is customized as such to reflect the structure and the composition of the portfolio. What is the Fund distribution policy? The Manager has the discretion to distribute part or all of the Fund s distributable income. The distribution (if any) may vary from period to period depending on the investment objective and the performance of the Fund. 2

4 FUND OBJECTIVE AND POLICY (CONTINUED) CIMB-PRINCIPAL EQUITY GROWTH & INCOME FUND What was the net income distribution for the financial year ended 30 April 2016? The Fund distributed a total net income of RM6.87 million to unit holders for the financial year ended 30 April As a result, the NAV per unit dropped from RM to RM on 27 July PERFORMANCE DATA Details of portfolio composition of the Fund for the last three financial years are as follows: % % % Collective investment scheme Quoted securities - Basic Materials Construction Consumer Products Corporate Energy Finance Health Care Hotel Industrials Infrastructure Projects Companies ("IPC") Plantation Properties Real Estate Investment Trusts ("REITs") Technology Telecommunications Trading/Services Utilities Cash and other net assets Performance details of the Fund for the last three financial years are as follows: NAV (RM Million) Units in circulation (Million) NAV per unit (RM) Highest NAV per unit (RM) Lowest NAV per unit (RM) Total return (%) (6.40) Capital growth (%) (11.35) Income distribution (%) Management Expense Ratio ("MER") (%) * Portfolio Turnover Ratio (PTR") (times) # * The Fund's MER decreased from 2.02% to 1.88% due to higher average NAV during the financial year under review. # The Fund's PTR declined from 1.10 times to 0.83 times as there were less trading activities for the financial year under review. Date of distribution Gross distribution per unit (sen) Net distribution per unit (sen)

5 PERFORMANCE DATA (CONTINUED) % % % % % Annual total return (6.40) (1.00) (Launch date: 15 May 1991) Past performance is not necessarily indicative of future performance and that unit prices and investment returns may go down, as well as up. All performance figures for the financial year have been extracted from Lipper. MARKET REVIEW (1 MAY 2015 TO 30 APRIL 2016) Asia Pacific ex-japan The benchmark MSCI AC Asia ex-japan Index lost 10% in Malaysian Ringgit ("MYR") terms during the financial year under review. The biggest issues were Emerging Market ("EM") fund outflows, commodity bear market and falling confidence in China. Asian equities performed well up to April 2015 and then gave it all back and more during the second half of the year. The market initially rallied led by Hong Kong foreign shares issued by enter prices incorporated in the mainland that are primarily listed in Hong Kong and traded in Hong Kong Dollar ("HKD") ("H-shares") on the back of a strong rally in the domestic Chinese companies traded in the Shanghai and Shenzen Stock Exchanges that are quoted in Chinese Yuan Renminbi ("CNY") ("Ashare") market. Sentiment for H-shares was also helped by the Chinese Securities Regulatory Commission s announcement on 27 March 2015 to broaden access to southbound link for China funds and the availability of margin financing. But from June 2015, all the asset classes from equities, fixed income to currencies weakened when investors started to lose confidence in the Chinese economy and the Government s capacity to manage the slowdown and its financial markets. First, the A-shares fell more than 40% from June 2015 to the end of August 2016 triggered by a crack-down on margin financing. Lack of People s Bank of China ("PBOC") policy action and large Initial Public Offerings ("IPO") in June 2015 also contributed. A ban on short selling forced hedging into the Hong Kong market. The Chinese Government then announced a slew of measures from late June 2015 ranging from cutting interest rates, lowering the Reserve Requirement Ratio ("RRR"), setting up a national team to support stock prices, suspending new IPOs, PBOC providing liquidity support to stabilize the market, requesting state owned enterprises ("SOE") not to sell shares, suspending almost half of total stocks in the A-share in early July These measures did not work and made investors even more worried about government s control of the economy. On 11 August 2015, the PBOC surprised investors by changing the CNY fixing mechanism and depreciated the currency by ~3% to CNY6.40 against US Dollar ("USD"). But this intensified concerns over further currency weakness in EM. The sell-off intensified across Asian equities, currencies and fixed income with the lows hit in late September In fact all Association of Southern Asian Nations ("ASEAN") currencies hit decade lows in September Throughout the second half of 2015, capital outflows began to accelerate in China as its foreign reserves started to fall sharply and this raised concerns of further CNY weakness. On 11 December 2015, the PBOC introduced a new trade weighted basket exchange rate. However, this failed to restore confidence, as shown in January 2016 s fall in foreign reserves of USD100 billion, similar to the previous months. 4

6 MARKET REVIEW (1 MAY 2015 TO 30 APRIL 2016) (CONTINUED) Asia Pacific ex-japan (continued) CIMB-PRINCIPAL EQUITY GROWTH & INCOME FUND Further weakness in commodity prices and its ramifications prompted major Central Banks globally to signal intent for more drastic monetary stimulus in January This was followed by a strong stock market performance across Asia in March 2016, driven by a risk-on rally in global financial markets, following an acceleration in China s credit growth, a lull in US economic growth and the US Federal Reserve s (the "Fed") accommodative monetary stance. The rally petered out in April 2016 as investors realize that these supportive factors are likely to be temporary. Malaysia The FBM100 Index fell points or 7.3% to 11, points over the financial year under review. May 2015 was a difficult month for Malaysia as the Kuala Lumpur Composite Index ("KLCI") fell convincingly below the 1,800-point psychological support on the back of weak corporate results and heightened political concerns. The tabling of the 11 th Malaysia Plan ( 11MP ) on 21 May 2015 failed to stem selling pressure, let alone excite the market. The market rout continued in June 2015 as it was weighed down by both external and internal risk factors: (1) Greece default risk; (2) US rate rise; (3) the impending Fitch decision on Malaysia s sovereign rating; and (4) foreign funds outflows. The market was erratic in the month of July Fitch s decision on revising Malaysia s sovereign rating to stable from negative had failed to boost market sentiment. Investors had remained cautious, as the market continued to be much affected by local headwinds and foreign funds outflows. The dampened situation was further aggravated by the China slowdown. August 2015 was another tough month for Malaysia with the benchmark index falling significantly by 835 points or 7.2%. Malaysian equities suffered from weak second quarter of 2015 corporate earnings, as well as weak currency and capital outflows, which were exacerbated by fears of capital controls. MYR weakened by 8.6% against the USD in August 2015 alone (YTD: -16.6%), hitting a new high of RM4.246 against USD on 26 August Net capital outflows hit RM4.1 billion for the month, bringing year-to-date ("YTD") net capital outflows to RM15.8 billion, surpassing total foreign net selling of RM6.8 billion for the whole of As there was no positive catalyst, market activity continued to be very narrow. September 2015 was another volatile month for Malaysia as the KLCI first rebounded strongly on the back of some stability returning to regional markets and Wall Street and news that the Government was allocating RM20 billion to ValueCap to buy up good value stocks, only to give up much of those gains when the Fed kept interest rates unchanged. For the month, the KLCI edged up only 8 points or 0.5% to close at 1,621 points. In October 2015, markets were lifted by the Fed's dovish tones which implied a possible delay in rate lift off, as well as the European Central Bank s hint that it could extend easing. China s willingness for policy support also encouraged market stability and prompted some fund flows back into EM. This extended to November 2015, where news about the sale of Edra Global Energy Bhd s power assets to the China General Nuclear Power Corporation ("CGN"), as well as China s commitment to buy Malaysian bonds helped support sentiment. December 2015 was a volatile month as the FBM100 Index fell to a low of 11,017 points before rebounding towards the end of the month. Oil prices dipped after the Organisation of the Petroleum Exporting Countries ( OPEC ) refrained from setting an official output target. Meanwhile, the much debated the Fed s lift off finally happened as interest rates were raised by 25 basis points ( bps ). Equities had a rocky start in The Index fell sharply earlier in the month before rebounding towards the end of January The sharp selloff globally spooked traders and Malaysia was not spared. The recovery towards the end of the month was helped by the recalibrated Budget 2016 as well as the rebound in crude oil prices and a stronger MYR. 5

7 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 MARKET REVIEW (1 MAY 2015 TO 30 APRIL 2016) (CONTINUED) Malaysia (continued) CIMB-PRINCIPAL EQUITY GROWTH & INCOME FUND In February 2016, the Index continued its downtrend as crude oil prices and the MYR were trading sideways. The MYR weakened slightly from RM4.148 to RM4.203 against USD. The latest fourth quarter of 2015 Consumer Sentiment Index touched a new low of For first half of 2016, domestic headwinds include Zeti s succession and corporate margin squeeze. Oil will remain in oversupply, while the China slowdown will keep markets volatile. March 2016 saw the FBM KLCI rally back above the 1,700 psychological mark as foreign funds came flowing back into Malaysia and other EM. The MYR moved back above the RM4.00 mark and touched the RM3.90 level to the USD while Brent Crude Oil rallied to a high USD43.10 per barrel from the USD29.30 low in January In March 2016, the FBM KLCI gained a hefty 63 points or 3.8% month-on-month ("m-o-m"). In April 2016, the FBM KLCI fell 2.61% to 1, points, giving up most of its gains in March 2016 despite the higher oil prices. Investors were rattled by news of 1Malaysia Development Berhad ("1MDB") s bond default, which triggered a cross default on two other notes. Bank Negara Malaysia s ( BNM ) new internally sourced governor failed to lift the market. Net foreign equity inflows slowed to RM427 million in April 2016, bringing YTD net foreign equity inflows to RM6 billion. 10-year Malaysian Government Securities ("MGS") closed the month at 3.87%, while the MYR was weaker which above RM3.90 against USD, down 0.78% m-o-m. FUND PERFORMANCE 1 year to years to years to Since inception to % % % % Income Capital (11.35) 0.11 (0.63) Total Return (6.40) Benchmark (8.74) Average Total Return (6.40) For the financial year under review, the Fund's total return was negative 6.40%. Nevertheless, the Fund outperformed the benchmark by 2.34%. 350% 300% 250% CIMB-Principal Equity Growth & Income Fund 70% FBM 100 Index + 30% MSCI AC Asia ex Japan 200% 150% 100% 50% 0% 6

8 FUND PERFORMANCE (CONTINUED) Changes in NAV Changes % NAV (RM Million) NAV/unit (RM) (11.34) NAV of the Fund increased by 12.01% for the financial year under review due to unit creations while NAV/unit fell by 11.34% due to negative investment performance as well as the results of income distribution. The Fund is ranked 8 th (Quartile 3), 2 nd (Quartile 1) and 4 th (Quartile 2) over the 1-year, 3-year and 5- year periods respectively under the Equity Malaysia Diversified in Lipper's ranking.. Performance data represents the combined income and capital return as a result of holding units in the Fund for the specified length of time, based on NAV to NAV price. The performance data assumes that all earnings from the Fund are reinvested and are net of management and trustee fees. Past performance is not reflective of future performance and income distributions are not guaranteed. Unit prices and income distributions, if any, may fall and rise. All performance figures for the financial year have been extracted from Lipper. PORTFOLIO STRUCTURE Asset allocation (% of NAV) Collective investment scheme Quoted securities - local Quoted securities - foreign Cash and other net assets TOTAL Asset allocation on equities has increased from 89.94% as at 30 April 2015 to 90.49% as at 30 April 2016 due to the accommodative monetary stance of central banks around the world as well as China s focus on growth stabilisation and economic rebalancing via fiscal and monetary support. MARKET OUTLOOK* Asia Pacific ex-japan The February to April 2016 risk-on rallies across Asian bonds and equities had been brought on by an acceleration in China s credit growth, a lull in US economy growth, and the Fed's accommodative monetary stance. The subsequent weakening of the USD and a surge in commodity prices encouraged a rebound in EM asset prices from oversold positions. These supportive factors, however, are likely to be temporary. Going ahead, we are more guarded in our investment stance, for the following reasons: Global growth remains lethargic; Policy responses in China to stabilize the economy have their limitations; Commodities markets may have hit its inflection point but another boom is not on the horizon; Complacency and Policy mistakes by Central Banks; and Earnings growth remains the key to the sustainability of this rally. Our earnings outlook are at odds with consensus. 7

9 MARKET OUTLOOK* (CONTINUED) Malaysia We continue to view 2016 as a year of slow global growth, low inflation and elevated volatility. The Fed will have to maintain an exceptionally easy monetary policy to accommodate the pace of global growth and to maintain global financial stability by preventing a sharp rise in the USD. Meanwhile, China s economy will remain weak as it restructures, but a hard landing would be averted as China still has various monetary and fiscal options it could draw upon. We remain cautious going into May 2016 as i) foreign equity inflows have abated in April 2016; ii) first quarter earnings guidance from corporates may continue to be weak for exporters, telecommunication and selective consumer staples companies. Earnings growth remains key to the sustainability of this rally which we think may start to bottom hopefully by second quarter of 2016; and iii) MYR has rallied on the back of higher oil prices to the upper range of our USD40 to USD50 per barrel forecast. We believe that in the short term, MYR may have rallied too fast and the current pause could be necessary. *This market outlook does not constitute an offer, invitation, commitment, advice or recommendation to make a purchase of any investment. The information given in this article represents the views of CIMB-Principal or based on data obtained from sources believed to be reliable by CIMB-Principal. Whilst every care has been taken in preparing this, CIMB-Principal makes no guarantee, representation or warranty and is under no circumstances liable for any loss or damage caused by reliance on, any opinion, advice or statement made in this market outlook. INVESTMENT STRATEGY Asia Pacific ex-japan We are neutral on Asian equities. Cyclical do not look oversold now after a risk-on rally in February 2016 and March Our key assumption is that earnings growth will probably be between zero and mid-single digits in 2016 to With this backdrop, equities are likely to be range bound given the self correcting mechanism in financial markets. The market is also likely to be driven by a narrow group of stocks. Major central banks will turn dovish when risk assets weaken and volatility spikes. This puts a floor for risk assets. On the flip side, when risk assets appreciate and volatility falls, financial conditions loosen and central banks worry about inflation and they turn hawkish. This puts a cap on risk assets. We have started to invest in some companies that will benefit from the 4 th Industrial Revolution (automation/robotics, fintech, virtual and sharing economy). We continue to look for quality growth stocks with good cash flow. Malaysia Despite our more cautious stance, from a bottom-up basis, we continue to be fully invested. However, we have adjusted our beta lower to reduce risk to the Fund. We will continue to add high dividend stocks such as REITs, conglomerates and consumer names into our portfolios as we believe that in an environment of negative yield globally, Malaysia offers decent upside from a dividend yield perspective. We also continue to maintain our overweight in the construction sector as positive news flow from more fiscal expansion from the Government will continue this year. 8

10 UNIT HOLDINGS STATISTICS Breakdown of unit holdings by size as at 30 April 2016 are as follows: Size of unit holdings (units) No of unit holders No of units held % of units held (million) 5,000 and below 60, ,001 to 10,000 1, ,001 to 50,000 2, ,001 to 500, ,001 and above Total 65, SOFT COMMISSIONS AND REBATES CIMB-Principal Asset Management Berhad (the "Manager"), and the Trustee (including their officers) will not retain any form of rebate or soft commission from, or otherwise share in any commission with, any broker in consideration for directing dealings in the investments of the Funds unless the soft commission received is retained in the form of goods and services such as financial wire services and stock quotations system incidental to investment management of the Funds. All dealings with brokers are executed on best available terms. During the financial year under review, the Manager and the Trustee did not receive any rebates from the brokers or the dealers but have retained soft commission in the form of goods and services such as financial wire services and stock quotations system incidental to investment management of the Funds. 9

11 STATEMENT BY MANAGER TO THE UNIT HOLDERS OF CIMB-PRINCIPAL EQUITY GROWTH & INCOME FUND CIMB-PRINCIPAL EQUITY GROWTH & INCOME FUND I, being a Director of CIMB-Principal Asset Management Bhd (the "Manager"), do hereby state that, in the opinion of the Manager, the accompanying audited financial statements set out on pages 14 to 56 are drawn up in accordance with the provisions of the Deeds and give a true and fair view of the financial position of the Fund as at 30 April 2016 and of its financial performance, changes in equity and cash flows for the financial year then ended in accordance with the provisions of the Malaysian Financial Reporting Standards ( MFRS ) and International Financial Reporting Standards ( IFRS ). For and on behalf of the Manager CIMB-Principal Asset Management Berhad (Company No.: K) MUNIRAH KHAIRUDDIN Chief Executive Officer/Executive Director Kuala Lumpur 16 June

12 TRUSTEE S REPORT TO THE UNIT HOLDERS OF CIMB-PRINCIPAL EQUITY GROWTH & INCOME FUND CIMB-PRINCIPAL EQUITY GROWTH & INCOME FUND We, AmanahRaya Trustees Bhd, have acted as Trustee of CIMB-Principal Equity Growth & Income Fund for the financial year ended 30 April In our opinion, CIMB-Principal Asset Management Berhad, (the "Manager"), has managed CIMB-Principal Equity Growth & Income Fund in accordance with the limitations imposed on the investment powers of the management company and the Trustee under the Deed, other provisions of the Deeds, the applicable Guidelines on Unit Trust Funds, the Capital Markets and Services Act 2007 and other applicable laws during the financial year ended. We are of the opinion that: (a) (b) (c) The procedures and processes employed by the Manager to value and/or price the units of CIMB-Principal Equity Growth & Income Fund are adequate and that such valuation/pricing is carried out in accordance with the Deeds and relevant regulatory requirement; Creation and cancellation of units are carried out in accordance with the Deeds and relevant regulatory requirement; and the distribution of returns made by CIMB-Principal Equity Growth & Income Fund as declared by Manager is in accordance with the investment objective of CIMB-Principal Equity Growth & Income Fund. Yours faithfully AMANAHRAYA TRUSTEES BERHAD HABSAH BINTI BAKAR Chief Executive Officer Kuala Lumpur, Malaysia 9 June

13 INDEPENDENT AUDITORS REPORT TO THE UNIT HOLDERS OF CIMB-PRINCIPAL EQUITY GROWTH & INCOME FUND REPORT ON THE FINANCIAL STATEMENTS CIMB-PRINCIPAL EQUITY GROWTH & INCOME FUND We have audited the financial statements of CIMB-Principal Equity Growth & Income Fund on pages 14 to 56, which comprise the statement of financial position as at 30 April 2016 of the Fund, and the statements of comprehensive income, statement of changes in equity and statement of cash flows for the financial year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on Notes 1 to 16. Manager s Responsibility for the Financial Statements The Manager of the Fund is responsible for the preparation of financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards. The Manager is also responsible for such internal control as the Manager determines is necessary to enable the preparation of financial statements that are free from material misstatement whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Fund s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Manager s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Manager, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 12

14 INDEPENDENT AUDITORS REPORT TO THE UNIT HOLDERS OF CIMB-PRINCIPAL EQUITY GROWTH & INCOME FUND (CONTINUED) REPORT ON THE FINANCIAL STATEMENTS (CONTINUED) Opinion In our opinion, the financial statements give a true and fair view of the financial position of the Fund as of 30 April 2016 and of its financial performance and cash flows for the financial year then ended, in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards. OTHER MATTERS This report is made solely to the unit holders of the Fund and for no other purpose. We do not assume responsibility to any other person for the content of this report. PRICEWATERHOUSECOOPERS (No. AF: 1146) Chartered Accountants Kuala Lumpur 16 June

15 STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 30 APRIL 2016 CIMB-PRINCIPAL EQUITY GROWTH & INCOME FUND Note RM RM INVESTMENT (LOSS)/INCOME Dividend income 3,539,718 3,334,298 Interest income from deposits with licensed financial institutions 482, ,176 Net (loss)/gain on financial assets at fair value through profit or loss 8 (9,507,627) 11,082,033 Other income 8,182 - Net foreign exchange gain 409,501 76,628 (5,068,130) 14,751,135 EXPENSES Management fee 4 1,993,095 1,666,764 Trustee s and custodian fees 5 246, ,434 Transaction costs 704, ,764 Audit fee 11,240 6,980 Tax agent s fee 36,121 55,385 Other expenses 249, ,973 3,240,953 3,072,300 (LOSS)/PROFIT BEFORE TAXATION (8,309,083) 11,678,835 Taxation 6 (112,557) (206,620) (LOSS)/PROFIT AFTER TAXATION AND TOTAL COMPREHENSIVE (LOSS)/ INCOME FOR THE FINANCIAL YEAR (8,421,640) 11,472,215 (Loss)/Profit after taxation is made up as follows: Realised amount 4,513,383 8,723,421 Unrealised amount (12,935,023) 2,748,794 (8,421,640) 11,472,215 The accompanying notes to the financial statements form an integral part of the audited financial statements. 14

16 STATEMENT OF FINANCIAL POSITION AS AT 30 APRIL Note RM RM CURRENT ASSETS Financial assets at fair value through profit or loss 8 125,786, ,820,936 Cash and cash equivalents 9 12,261,888 13,223,653 Amount due from stockbrokers 729,909 1,744,612 Amount due from Manager 296,750 1,385,168 Amount due from Manager of collective investment scheme 5,407 - Dividends receivable 109, ,742 Tax recoverable 214, ,040 TOTAL ASSETS 139,404, ,544,151 CURRENT LIABILITIES Amount due to stockbrokers 1,055,675 3,815,318 Amount due to Manager 125, ,366 Accrued management fee 170, ,086 Amount due to Trustee 7,978 7,004 Other payables and accruals 48,390 41,625 TOTAL LIABILITIES 1,408,099 4,340,399 NET ASSET VALUE OF THE FUND 137,995, ,203,752 EQUITY Unit holders' capital 67,192,301 37,107,945 Retained earnings 70,803,693 86,095,807 NET ASSETS ATTRIBUTABLE TO UNIT HOLDERS 137,995, ,203,752 NUMBER OF UNITS IN CIRCULATION (UNITS) ,902,568 89,365,582 NET ASSET VALUE PER UNIT (RM) The accompanying notes to the financial statements form an integral part of the audited financial statements. 15

17 STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 30 APRIL 2016 CIMB-PRINCIPAL EQUITY GROWTH & INCOME FUND Unit holders' Retained capital earnings Total Note RM RM RM Balance as at 1 May ,107,945 86,095, ,203,752 Movement in unit holders' contributions: - Creation of units from applications 38,270,850-38,270,850 - Creation of units from distribution 6,562,235-6,562,235 - Cancellation of units (14,748,729) - (14,748,729) Total comprehensive loss for the financial year - (8,421,640) (8,421,640) Distribution 7 - (6,870,474) (6,870,474) Balance as at 30 April ,192,301 70,803, ,995,994 Balance as at 1 May ,675,471 80,784, ,460,126 Movement in unit holders' contributions: - Creation of units from applications 18,696,567-18,696,567 - Creation of units from distribution 5,813,526-5,813,526 - Cancellation of units (13,077,619) - (13,077,619) Total comprehensive income for the financial year - 11,472,215 11,472,215 Distribution 7 - (6,161,063) (6,161,063) Balance as at 30 April ,107,945 86,095, ,203,752 The accompanying notes to the financial statements form an integral part of the audited financial statements. 16

18 STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 30 APRIL 2016 CIMB-PRINCIPAL EQUITY GROWTH & INCOME FUND Note RM RM CASH FLOWS FROM OPERATING ACTIVITIES Proceeds from disposal of quoted securities 100,800, ,163,159 Purchase of collective investment scheme (943,147) - Purchase of quoted securities (126,635,188) (126,297,963) Dividend income received 3,466,119 2,860,010 Interest income received from deposits with licensed financial institutions 482, ,176 Management fee paid (1,972,231) (1,647,871) Trustee s and custodian fees paid (245,844) (399,132) Payments for other fees and expenses (289,616) (163,863) Tax refund received 16,525 32,148 Other income received 2,775 - Net realised foreign exchange loss (145,297) (52,733) Net cash used in operating activities (25,463,148) (3,248,069) CASH FLOW FROM FINANCING ACTIVITIES Cash proceeds from units created 39,359,268 17,406,953 Payments for cancellation of units (14,949,989) (12,852,988) Distribution paid (308,239) (347,537) Net cash generated from financing activities 24,101,040 4,206,428 Net (decrease)/increase in cash and cash equivalents (1,362,108) 958,359 Effects of foreign exchange differences 400, ,464 Cash and cash equivalents at the beginning of the financial year 13,223,653 12,071,830 Cash and cash equivalents at the end of the financial year 9 12,261,888 13,223,653 The accompanying notes to the financial statements form an integral part of the audited financial statements. 17

19 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 APRIL THE FUND, THE MANAGER AND ITS PRINCIPAL ACTIVITY CIMB-PRINCIPAL EQUITY GROWTH & INCOME FUND CIMB-Principal Equity Growth & Income Fund (the "Fund") is governed by a Principal Master Deed dated 15 May 2008, a Third Supplemental Master Deed dated 25 June 2008, a Sixth Supplemental Master Deed dated 14 July 2008, a Seventh Supplemental Master Deed dated 19 November 2008, Thirteenth Supplemental Master Deed dated 26 June 2012, and an Eighteenth Supplemental Master Deed dated 25 March 2015 (collectively referred to as the "Deeds"), made between CIMB-Principal Asset Management Bhd (the Manager ) and AmanahRaya Trustees Bhd (the Trustee ). The Fund may invest between 70% to 98% (both inclusive) of its NAV in equities in order to gain long-term capital growth. The Fund may opt to invest in foreign equities up to a maximum of 30% of its NAV. Such foreign equities must be equity securities of companies domiciled in, listed in, and/or have significant operations in Asia ex Japan. Significant operations means major businesses of the company. For example, the Fund can invest in a company with significant business/operations in Thailand but listed on the NYSE. The threshold for significant operations would be if more than 30% of total group revenue derives from countries in Asia ex Japan. The calculation would be based on the most recent financial reports released by the companies (e.g. interim and annual reports). In line with its objective, the investment policy and strategy of the Fund will be to invest primarily in equities, with a bias towards growth stocks that have the potential to deliver long-term capital appreciation. To a lesser extent, the Fund invests in liquid assets primarily for the purpose of cash management. The investment management function for the foreign investments of this Fund has been delegated to CIMB-Principal (S) with the approval of the SC. CIMB-Principal (S) will be responsible for investing and managing these foreign investments in accordance with the investment objective and within the investment restrictions. All investments will be subjected to the SC Guidelines on Unit Trust Funds, SC requirements, the Deeds, except where exemptions or variations have been approved by the SC, internal policies and procedures and the Fund s objective. The Manager, a company incorporated in Malaysia, is a subsidiary of CIMB Group Sdn Bhd and regards CIMB Group Holdings Berhad as its ultimate holding company. The Manager is also an associate of Principal International (Asia) Limited, which is a subsidiary of Principal Financial Group Inc. The principal activities of the Manager are the establishment and management of unit trust funds and fund management activities. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The following accounting policies have been used consistently in dealing with items which are considered material in relation to the financial statements: (a) Basis of preparation The financial statements have been prepared in accordance with the provisions of the MFRS and IFRS. 18

20 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (a) Basis of preparation (continued) The financial statements have been prepared under the historical cost convention, as modified by financial assets at fair value through profit or loss. The preparation of financial statements in conformity with MFRS and IFRS requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported year. It also requires the Manager to exercise their judgment in the process of applying the Fund s accounting policies. Although these estimates and judgment are based on the Manager s best knowledge of current events and actions, actual results may differ. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 2(l). Standards, amendments to published standards and interpretations to existing standards that are effective: The Fund has applied the following amendments for the first time for the financial year beginning 1 May 2015: Annual Improvements to MFRS Cycle Annual Improvements to MFRS Cycle The adoption of these amendments did not have any impact on the current financial year or any prior period and is not likely to affect future periods. The standards, amendments to published standards and interpretations to existing standards that are applicable to the Fund but not yet effective and have not been early adopted are as follows: (i) Financial year beginning on/after 1 May 2016 Amendments to MFRS 101 Presentation of financial statements - Disclosure Initiative (effective from 1 January 2016) provide clarifications on a number of issues, including: Materiality an entity should not aggregate or disaggregate information in a manner that obscures useful information. Where items are material, sufficient information must be provided to explain the impact on the financial position or performance. Disaggregation and subtotals line items specified in MFRS 101 may need to be disaggregated where this is relevant to an understanding of the entity s financial position or performance. There is also new guidance on the use of subtotals. Notes confirmation that the notes do not need to be presented in a particular order. 19

21 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (a) Basis of preparation (continued) (i) Financial year beginning on/after 1 May 2016 (continued) Other comprehensive Income ("OCI") arising from investments accounted for under the equity method the share of OCI arising from equityaccounted investments is grouped based on whether the items will or will not subsequently be reclassified to profit or loss. Each group should then be presented as a single line item in the statement of other comprehensive income. According to the transitional provisions, the disclosures in MFRS 108 regarding the adoption of new standards/accounting policies are not required for these amendments. Annual Improvements to MFRS Cycle (effective from 1 January 2016) As these amendments merely clarify the existing requirements, they do not affect the Fund s accounting policies or any of the disclosures. (ii) Financial year beginning on/after 1 May 2017 MFRS 15 Revenue from Contracts with Customers (effective from 1 January 2017) replaces MFRS 118 Revenue and MFRS 111 Construction contracts and related interpretations. The standard deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity s contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The core principle in MFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to the customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Fund will apply this standard when effective. This standard is not expected to have a significant impact on the Fund s financial statements. (iii) Financial year beginning on/after 1 May 2018 MFRS 9 Financial Instruments (effective from 1 January 2018) will replace MFRS 139 Financial Instruments: Recognition and Measurement. The complete version of MFRS 9 was issued in November MFRS 9 retains but simplifies the mixed measurement model in MFRS 139 and establishes three primary measurement categories for financial assets: amortised cost, fair value through profit or loss and fair value through OCI. The basis of classification depends on the entity's business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are always measured at fair value through profit or loss with an irrevocable option at inception to present changes in fair value in OCI (provided the instrument is not held for trading). A debt instrument is measured at amortised cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest. 20

22 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (a) Basis of preparation (continued) (iii) Financial year beginning on/after 1 May 2018 (continued) For liabilities, the standard retains most of the MFRS 139 requirements. These include amortised cost accounting for most financial liabilities, with bifurcation of embedded derivatives. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity s own credit risk is recorded in OCI rather than the income statement, unless this creates an accounting mismatch. MFRS 9 introduces an expected credit loss model on impairment that replaces the incurred loss impairment model used in MFRS 139. The expected credit loss model is forward-looking and eliminates the need for a trigger event to have occurred before credit losses are recognised. The Fund will apply this standard when effective. This standard is not expected to have a significant impact on the Fund s financial statements. (b) Financial assets and financial liabilities Classification The Fund designates its investments in collective investment scheme and quoted securities as financial assets at fair value through profit or loss at inception. Financial assets are designated at fair value through profit or loss when they are managed and their performance evaluated on a fair value basis. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and have been included in current assets. The Fund s loans and receivables comprise cash and cash equivalents, amount due from stockbrokers, amount due from Manager, amount due from Manager of collective investment scheme and dividends receivable. Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability. The Fund classifies amount due to stockbrokers, amount due to Manager, accrued management fee, amount due to Trustee, and other payables and accruals as other financial liabilities. 21

23 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (b) Financial assets and financial liabilities (continued) Recognition and measurement Regular purchases and sales of financial assets are recognised on the trade-date, the date on which the Fund commits to purchase or sell the asset. Investments are initially recognised at fair value. Transaction costs are expensed in the statement of comprehensive income. Financial liabilities, within the scope of MFRS 139, are recognised in the statement of financial position when, and only when, the Fund becomes a party to the contractual provisions of the financial instrument. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Fund has transferred substantially all risks and rewards of ownership. Financial liabilities are derecognised when it is extinguished, i.e. when the obligation specified in the contract is discharged or cancelled or expired. Unrealised gains or losses arising from changes in the fair value of the financial assets at fair value through profit or loss are presented in the statement of comprehensive income within net gain or loss on financial assets at fair value through profit or loss in the financial year which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in the statement of comprehensive income as part of gross dividend income when the Fund s right to receive payments is established. Collective investment schemes are valued based on the most recent published NAV per unit or share of such collective investment schemes or, if unavailable, the last published price of such unit or share (excluding any sales charge included in such selling price). Quoted securities in Malaysia are valued at the last done market price quoted on Bursa Malaysia Securities Bhd ( Bursa Securities ) at the date of the statement of financial position. Foreign quoted securities are valued at the last traded market price quoted on the respective foreign stock exchanges at the close of the business day of the respective foreign stock exchanges. If a valuation based on the market price does not represent the fair value of the investments, for example during abnormal market conditions or when no market price is available, including in the event of a suspension in the quotation of the investments for a period exceeding 14 days, or such shorter period as agreed by the Trustee, then the investments are valued as determined in good faith by the Manager, based on the methods or bases approved by the Trustee after appropriate technical consultation. Deposits with licensed financial institutions are stated at cost plus accrued interest calculated on the effective interest method over the period from the date of placement to the date of maturity of the respective deposits. Loans and receivables and other financial liabilities are subsequently carried at amortised cost using the effective interest method. 22

24 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (b) Financial assets and financial liabilities (continued) Impairment for assets carried at amortised costs For assets carried at amortised cost, the Fund assesses at the end of the reporting year whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a loss event ) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. The amount of the loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset s original effective interest rate. The asset s carrying amount is reduced and the amount of the loss is recognised in statement of comprehensive income. If loans and receivables has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Fund may measure impairment on the basis of an instrument s fair value using an observable market price. If, in a subsequent financial year, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor s credit rating), the reversal of the previously recognised impairment loss is recognised in statement of comprehensive income. When an asset is uncollectible, it is written off against the related allowance account. Such assets are written off after all the necessary procedures have been completed and the amount of the loss has been determined. (c) Foreign currency Functional and presentation currency Items included in the financial statements of the Fund are measured using the currency of the primary economic environment in which the Fund operates (the functional currency ). The financial statements are presented in Ringgit Malaysia ( RM ), which is the Fund s functional and presentation currency. Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in statement of comprehensive income, except when deferred in OCI as qualifying cash flow hedges. 23